UC-NRLF
REPORT
OF
THE FEDERAL TRADE COMMISSION
ON THE
NEWS-PRINT PAPER
INDUSTRY
JUNE 13, 1917
WASHINGTON
GOVERNMENT PRINTING OFFICE
1917
GIFT OF
DOOUMEN
DtPT
REPORT
OF
\A>
THE FEDERAL TRADE COMMISSION
ON THE
NEWS-PRINT PAPER
INDUSTRY
JUNE 13, 1917
WASHINGTON
GOVERNMENT PRINTING OFFICE
1917
r JA
CONTENTS.
Pag*.
Letter of submitted 11
CHAPTER I. INTRODUCTION.
Sec. 1. Origin of investigation 15
2. Petition of news-print manufacturers 16
3. Cooperation of publishers' associations 18
4. Scope of investigation 17
Price inquiry 17
Cost inquiry 18
Supply and demand factors 18
Activities of manufacturers and jobbers 19
Conclusions and recommendations 19
5. Efforts for immediate relief of publishers 19
CHAPTER II. GENERAL DESCRIPTION OF THE NEWS-PRINT PAPER
INDUSTRY.
Sec. 1. Introduction 21
Daily newspapers 21
Weekly newspapers 22
2. Development of the news-print industry 23
Rank of industry 23
Period prior to 1910 23
Period subsequent to 1910 24
3. Process of production 26
Mechanical pulp 26
Chemical pulp 27
Paper making 29
4. Domestic and Canadian companies 30
Production and shipments 31
Equipment 34
Consumption of raw materials 37
5. News-Print Manufacturers Association 40
6. Paper jobbers and sales agents 42
7. Imports and exports of news-print paper 43
Imports 43
Import duties 45
Exports 45
3
362033
4 CONTENTS.
CHAPTER III -PRICES OF NEWS-PRINT PAPER.
Page.
Sec. 1. Introduction 48
2. Open-market prices 51
Range of open-market prices of roll news 51
Range of open-market prices of sheet news 52
Prices of ready-print sheets 54
3. Contract prices 55
Provisions of contracts 56
Range of prices on contracts for 1,000 tons or over 58
Range of prices on contracts for 100 to 999 tons 61
Range of prices on contracts for less than 100 tons 63
Prices on contracts covering deliveries in 1917 63
Low, high, and average prices on contracts for 100 tons or over 64
Contracts in force, September 1, 1916 65
4. Average receipts per 100 pounds at mill 67
5. Effect of contract system on prices 69
6. Additional cost of paper to publishers in 1917 69
7. Disparity in prices among publishers 71
CHAPTER IV. JOBBERS' COMMISSIONS AND MARGINS OF GROSS
PROFIT.
Sec. 1. Introduction 73
2. Margins of profit on contracts 75
3. Margins of profit on open-market sales 77
Margins on sheet news, 1915-1916 77
Prices and margins in 1917 ' 77
4. Jobbers' cost of doing business 79
5. Conclusions 80
CHAPTER V. COSTS AND PROFITS OF MANUFACTURE.
Sec. 1. Introduction 82
Items eliminated from costs 82
Readjustment of depreciation 83
Miscellaneous readjustments 84
2. News-print paper costs, 1913-1916 85
Average costs for second half of 1916 89
Percentage of cost 90
Cost of news-print paper, by groups of mills 91
Cost of news-print paper by individual mills 93
3. Sulphite costs, 1913-1916 96
Average costs for second half of 1916 98
Percentage of cost 98
Cost of production of sulphite, by groups of mills 99
4. Ground-wood costs, 1913-1916 100
Average costs for second half of 1916 102
Percentage of cost 103
Average cost of producing ground wood, by groups of milb 103
5. News-print paper profits, per ton 104
Average profits of United States mills, by groups 107
6. Profits on investment 110
7. Conclusions... 113
CONTENTS. 5
CHAPTER VI. SUPPLY AND DEMAND FACTORS.
Page.
Sec. 1. Introduction 116
2. Causes of domestic demand 118
Increase in circulation 118
Increase in advertising 120
Effect of panic conditions 121
3. Causes of foreign demand 122
4. Causes of limited supply 123
5. Prospective supply and demand for 1917 125
6. Conclusions 126
CHAPTER VII. EVIDENCE OF VIOLATIONS OF THE ANTITRUST
LAWS.
Sec. 1. The News-Print Manufacturers Association 127
2. Allotment of customers 128
3. Prorating and absorbing tonnage of new mills 129
4. Curtailment of production 129
5. Canadian joint selling agencies 130
6. Other activities 130
CHAPTER VIII. SUMMARY OF PRINCIPAL FACTS WITH CONCLU-
SIONS AND RECOMMENDATIONS.
Sec. 1. Principal facts 132
Costs of production 132
Present conditions serious 132
Causes of existing conditions 133
2. Conclusions 134
3. Efforts of the Commission to afford relief 135
Proposal of manufacturers 135
Action of publishers 137
Action of jobbers 138
Findings of the Commission as to fair prices 138
4. Recommendations 141
LIST OF TABLES.
Page.
1. Production and shipments of news-print paper by principal United States
and Canadian companies, 1913-1916 32
2. Equipment of 16 United States manufacturers and 11 Canadian manu-
facturers of news-print paper in 1916. . . '. 35
3. Percentage of sulphite to total pulp for 12 principal United States companies
and 9 principal Canadian companies, 1915-1916 (first half) 38
4. Imports into the United States of printing paper valued at not above 2.5
cents per pound, 1911-1916 44
5. Exports of news-print paper from the United States, 1911-1916 46
6. Range of open-market prices to publishers on purchases of 18 tons or over,
of news-print paper in rolls, by States, 1915-1916 52
g 7. Range of open-market prices to publishers on purchases of 1 to 17 tons, in-
clusive, of news-print'paper in sheets, by States, 1915-1916 53
8. Prices of the Western Newspaper Union for ready-print sheets per quire of
six-column quarto, 30 by 44-50-pound paper, August 1, 1913-August 1,
1916, inclusive 55
9. Range of prices on contracts with publishers for 1,000 tons or over of news-
print paper in rolls, by cities, 1912-1916 (first half) 59
10. Range of prices on contracts with publishers for 100 to 999 tons, inclusive,
of news-print paper in rolls, by States, 1913-1916 (first half) 62
11. Lowest, highest, and average prices on contracts with publishers for 100 tons
or over of news-print paper in rolls, by cities, 1912-1916 (first half) 64
12. Dates of signing contracts with publishers for 100 tons or over of news-print
paper, in force on September 1, 1916 65
13. Average receipts per 100 pounds of news-print paper at mill on shipments,
by districts, 1913-1916 (first half) 67
14. Jobbers' commissions and margins, in percentages of cost price, on contracts
with publishers for 18 tons and over of news-print paper in rolls, 1913-
1916 (first half) 76
15. Jobbers' margins, in percentages of purchase price, on open-market sales to
publishers of 1 to 17 tons, inclusive, of news-print paper in sheets, by
groups, 1915-1916 (first half) 77
16. Average cost of manufacture per ton of news-print paper for United States
and Canadian mills, 1913-1916 (first half) 86
17. Percentage of total cost of producing news-print paper attributable to par-
ticular items United States and Canadian mills combined 1913-1916
(first half) 90
18. Cost of production of news-print paper in United States mills covered by the
investigation, arranged by groups according to cost per ton, 1913-1916
(first half) 91
19. Cost of manufacture per ton of news-print paper for principal United States
mills, 1915-1916 (first half) 94
20. Average cost of manufacture per ton of sulphite for United States and
Canadian mills, 1913-1916 (first half) 97
6
LIST OF TABLES. 7
Page.
21. Percentage of total cost of producing sulphite attributable to particular
items United States and Canadian mills combined 1913-1916 (first
half) 99
22. Cost of production of sulphite in United States mills covered by the investi-
gation, arranged by groups according to cost per ton, 1913-1916 (first half). 100
23. Average cost of manufacture, per ton, of ground wood, for United States
and Canadian mills, 1913-1916 (first half) 101
24. Percentage of total cost of producing ground wood attributable to particular
items United States and Canadian mills combined 1913-1916 (first
half) 103
25. Cost of production oi ground wood in United States mills covered by the
investigation, arranged by groups according to cost per ton. 1913-1916
(first half) 104
26. Average sales, costs, and profits per ton of news-print paper for United
States and Canadian mills, 1913-1916 (first half) 105
27. Variations in the profits per ton of news-print paper sold by United States
mills covered by the investigation, by groups, 1913-1916 (first half) 108
28. Rates of profit on net in vestment of 15 United States companies, 1915-1916
(first half) Ill
29 Statistics of production, imports, exports, and stocks of news-print paper,
in the United States, 1915-1916 1. 116
30. Average daily circulation of 114 newspapers in English and 10 in foreign
languages with a circulation exceeding 50,000 copies, 1913-1916 119
31. Average daily circulation of 114 newspapers printed in English, grouped
according to circulation, 1913-1916 120
32. Increase in the columns of advertising of 40 large daily newspapers, first half
of 1916 over preceding half-year periods 121
LIST OF EXHIBITS.
Page.
1. Petition of the News-Print Manufacturers Association to the Federal Trade
Commission 142
2. The Federal Trade Commission's suggestion of smaller Sunday papers 143
3. Tariff duties on printing paper 148
4. Tariff duties on wood pulp 150
5. Contract forms for the sale of news print 151
6. Circulars sent out by jobbers in regard to the high prices and scarcity of paper. 154
8
ACKNOWLEDGMENT.
The Commission desires to mention as especially contributing to
the preparation of this report Messrs. E. O. Merchant, Le Claire
Hoover, and William T. Chantland. Messrs. F. L. Hawes, W. R.
Bendz, W. W. Bays, J. K. Arnold, H. L. Anderson, W. P. Sterns,
J. H. Bradford, and A. R. Peterson also rendered valuable assistance.
9
LETTER OF SUBMITTAL
FEDERAL TRADE COMMISSION,
Washington, June 13, 1917.
To the PRESIDENT OF THE SENATE :
The Federal Trade Commission has been engaged upon an inves-
tigation of the news-print paper industry pursuant to Senate reso-
lution 177, Sixty-fourth Congress (Senator Owen), adopted April
24, 1916, and there is submitted herewith its complete report. A
preliminary report was submitted on March 3, 1917, which con-
tained a summary of the Commission's activities and findings in
connection with the investigation and which recited the efforts of
the Commission through processes of accommodation and arbitra-
tion to restore competitive conditions in the industry and to insure
a fair price to consumers of news-print paper while the processes
of restoration were going forward. This preliminary report, with
some revisions, has been incorporated in the complete report and
will be found in Chapter VIII, which contains the conclusions and
recommendations of the Commission.
INCREASED PAPER COST.
The consumption of news print paper in the United States in 1916
amounted to about 1,775,000 net tons, valued at more than $70,000,000.
At the prices now prevailing this tonnage will cost news-print con-
sumers in 1917 more than $105,000,000, an increase of $35,000,000,
or 50 per cent. Most of this increase will fall upon newspaper pub-
lishers. If the average increase in cost of manufacture in 1917 over
1916 is estimated at $10 per ton, which is liberal, one-half of the
$35,000,000 increase in paper cost represents additional profits to the
manufacturers.
FAILURE OP ARBITRATION AGREEMENT.
The efforts of the Commission to restore competitive conditions in
the news-print industry expeditiously and to arbitrate and effectively
project a fair price for news-print paper have failed. Since the ar-
bitration agreement referred to in the preliminary report was en-
tered into with some of the manufacturers of news-print paper and
since the award of the Commission fixing a fair price for news-print
11
12 REPORT ON NEWS-PRINT PAPER INDUSTRY.
paper was announced a Federal grand jury for the southern district
of New York, partially upon evidence furnished by the Commis-
sion, has found indictments against four of the signatories to such
arbitration agreement for violations of the Sherman antitrust law
and the said indictments are now pending for trial. From the time
the arbitration agreement was signed and the award made, and prior
thereto, the Commission has bent every effort to bring about some prac-
tical relief to this situation. The plan failed for several reasons, the
principal reason being that the arrangement was voluntary and the
Commission had no power or warrant under the law to make it
effective. Several of the manufacturers signatory to the agreement,
subsequent to the finding of the indictment in this matter notified the
Commission that they would not proceed under such arbitration
agreement, The result has been that news-print paper has been
billed and sold at the same exorbitant prices that obtained in many
instances theretofore.
PRESENT SITUATION SERIOUS
The news-print paper situation is very serious, not only to the
consumers of paper but to the public generally and to the Govern-
ment of the United States, which is itself a large consumer of paper.
The Commission has reason to believe that this situation will be still
more aggravated and serious in the ensuing months. In normal
times competitive conditions would have been gradually restored
through the processes of law, but it would have required some time
to translate the effect into the prices of paper. The demand for
news-print paper is constantly increasing and gives promise of still
greater increase with the continuance of the war. The supply of
news-print paper available to meet this demand is dependent upon
mills already in existence. This supply will probably not exceed the
quantity produced last year and may be less owing to disturbances
that may result from the war. Under normal conditions it takes
from twelve months to two years to bring a new paper mill into
operation. Under present conditions it would take much longer.
It seems probable, therefore, that with the demand for news-print
paper increasing and the supply remaining constant or possibly
diminishing there will be a repetition of the panic market of last
year and the exaction of prices that are entirely out of measure with
the cost of production. The consequences to thousands of smaller
newspapers and to many of the larger ones, and through them to the
reading public, will be most serious.
WAR EMERGENCY MEASURE RECOMMENDED.
By reason of this condition, and because of the vital interest to
the public of an efficient dissemination of news in this crisis, the
LETTER OF SUBMITTAL. 13
Commission recommends as a war emergency measure that Congress
by appropriate legislation provide :
(1) That all mills producing and all agencies distributing print
paper and mechanical and chemical pulp in the United States be
operated on Government account; that these products be pooled in
the hands of a Government agency and equitably distributed at a
price based upon cost of production and distribution plus a fair profit
per ton.
(2) That pursuant thereto some Federal agency be empowered and
directed to assume the supervision and control thereof during the
pendency of the war.
(3) That, by reason of the fact that approximately 75 per cent
of the production of news-print paper in Canada comes into the
United States, proper action be taken to secure the cooperation of
the Canadian Government in the creation of a similar governmental
agency for the same function, which shall be clothed with power
and authority to act jointly with the governmental agency of the
United States for the protection of the consumers and manufacturers
of print paper and the public of the United States and Canada.
(4) That, in case the Canadian Government shall not join in such
a cooperative enterprise, then importation of paper and mechanical
and chemical pulp into the United States shall be made only on Gov-
ernment account to or through the Federal agency charged with such
supervision and distribution.
In this connection the Commission desires to point out that such
a plan contemplates the operation of mills under their present man-
agement and the use of the present distributing agencies, but that
such use and operation shall be for the public good, directed by a
disinterested public agency to secure equitable distribution and a
price that is based upon a fair cost of production and a fair profit
per ton to be determined without regard to the panic market created
by unusual and abnormal conditions. This plan has the virtue of
being analogous to those plans which have been tried and success-
fully operated in Great Britain. It will also insure the maximum
production and greatest facility in transportation and distribution
and will adapt itself readily to a return to normal competitive con-
ditions upon the conclusion of the war.
Respectfully submitted.
WILLIAM J. HARRIS, Chairman.
JOSEPH E. DAVIES.
WILLIAM B. COLVER.
JOHN FRANKLIN FORT.
CHAPTER L
INTRODUCTION.
Section 1. Origin of investigation.
The investigation of the news-print paper industry was made by
the Commission pursuant to the following resolution of the Senate
of the United States :
Resolved, That the Trade Commission is hereby requested to
inquire into the increase of the price of print paper during the
last year, and ascertain whether or not the newspapers of the
United States are being subjected to unfair practices in the sale
of print paper. 1
During the first session of the Sixty-fourth Congress complaints
from publishers resulted in the introduction of various resolutions
in both Houses of Congress calling for an investigation of the rise in
prices of news-print paper. These complaints came mainly from the
smaller publishers not protected by contracts, who were the first to
feel the increase in prices.
Trade papers early in 1916 pointed out a probable increase in con-
sumption on account of the demand for advertising space, and
warned publishers of a possible scarcity. On April 5, at the instance
of the News-Print Manufacturers Association, a conference was held
in New York between representatives of the manufacturers and pub-
lishers to discuss the paper situation. The purpose of the manu-
facturers in seeking this conference was afterwards set forth by the
secretary of the association in an interview appearing in the Editor
and Publisher, October 7, 1916, as follows:
We were approaching a crisis, and, unless something was done
to curtail the demand, to conserve the supply, we could see that
there would be a shortage that would seriously affect newspapers,
not only with regard to the quantity they might desire, but as
to the price, for it must be perfectly apparent to any reasonable
man that where there is a shortage of material a demand in
excess of the supply, with first one and then the other bidding
at a higher rate to get what the other fellow wants and must
have-^that increased prices naturally result.
Nothing was accomplished by the conference.
1 S. Res. 177, 64th Cong., 1st sess., adopted Apr. 24, 1916.
15
16 REPORT ON NEWS-PRINT PAPER INDUSTRY.
Section 2. Petition of news-print manufacturers.
On May 6, 1916, shortly following the adoption of the Senate reso-
lution above referred to, the News-Print Manufacturers Association
made formal appearance before the Commission by its secretary and
attorneys, who presented a petition signed by the executive commit-
tee of the association, 1 and asked that
as soon as it can be done an investigation be had by your body
into this question in accordance with the Senate resolution above
set forth; and these petitioners respectfully state that they will
consider it a privilege to furnish ;this Commission any informa-
tion within its power.
Under date of May 9, 1916, the secretary of the association reiter-
ated the desire of both Canadian and United States members to
cooperate with the Commission in the following statement :
It is our earnest desire that this investigation of the news-
print paper manufacturing industry shall be so thorough and
complete that it may not be necessary to make further investiga-
tions of this sort for some time to come, and to that end we
tender you all the facilities of our organization, and hope that
our assistance may facilitate the investigation both in point of
time and expense.
The cooperation of the members of the association and also of sev-
eral domestic companies not belonging to the association, all of which
voluntarily opened their books to the Commission's accountants and
agents and furnished all the information desired, greatly expedited
the progress of the investigation, and also made it possible to study
the industry in Canada as well as in the United States.
Section 3. Cooperation of publishers' associations.
The American Newspaper Publishers Association, National Edi-
torial Association, Association of Pennsylvania Dailies, and others
have cooperated with the Commission in this investigation. Their
representatives attended the various hearings called by the Commis-
sion to discuss the news-print paper situation, and their officers were
active in urging members to supply information called for by sched-^
ules of questions which the Commission sent to newspaper publishers.
Very commendable work has also been done by the officers of these
associations in urging members to disallow the return of unsold papers
by newsdealers, to eliminate waste, and to curtail consumption.
Early in March, 1916, the manager of the American Newspaper
Publishers Association called the attention of the members to the re-
duced stocks of news-print paper and higher current prices, and sug-
gested serious consideration of economy in the use of paper. A month
later a bulletin was issued declaring that reserve stocks were " at or
For full text see Exhibit 1.
INTRODUCTION. 17
about the danger line," and urging that "every economy should be
made in the use of news print until the mills have had an opportunity
to replenish their reserve." In subsequent bulletins publishers were
continually urged to eliminate waste and curtail consumption. This
association has also inaugurated campaigns for saving waste paper
and wrapping paper which have had important results.
The propaganda spread by publishers' associations, trade papers,
etc., has apparently accomplished much good. Reports from all
parts of the country indicate that since about the middle of 1916
many publishers have been working individually and in cooperation
to eliminate wastes and to reduce their consumption to the minimum
required by the news and advertising matter.
In a bulletin issued by the American Newspaper Publishers Asso-
ciation, dated October 21, 1916, it was announced that 54C papers
had reported that they no longer allowed papers to be returned.
Moreover, 90 had increased their selling price and 21 had advanced
advertising rates.
In response to its letter of October 14, 1916, encouraging and
urging economy of news-print paper, especially in Sunday editions,
the Federal Trade Commission received within two weeks over 100
responses from publishers announcing their adherence to the pro-
posed policy and stating in nearly all instances that they had
already instituted some economies. 1
in this connection attention should be called to the success of the
New York Globe in meeting increased paper costs by the introduc-
tion of various economies and the adoption of more efficient methods
based on a knowledge of costs. The publisher of this newspaper
issued a pamphlet in February, 1917, giving the results of his expe-
rience and study of methods to meet the abnormal news-print
situation. 2
Section 4. Scope of investigation.
Owing to the importance of reporting its conclusions as quickly as
possible, the Commission limited its inquiry in this investigation to
the subjects especially pertinent to the determination of the causes
of the present increase in price. In Chapter II, however, are pre-
sented some data of a general nature regarding the news-print in-
dustry which will be of value to the reader in reaching a better
understanding of the price question.
PRICE INQUIRY. The first inquiry of the Commission was to deter-
mine to what extent prices of news-print paper had risen in different
localities. For this purpose agents of the Commission collected a
1 For extracts from these letters, see Exhibit 2.
'Newspaper Efficiency, by Jason Rogers.
88569 17-
18 REPORT ON NEWS-PRINT PAPER INDUSTRY.
mass of price data from the sales records of the manufacturers, sell-
ing agencies, and jobbers. Prices were also furnished by a large num-
ber of newspaper publishers throughout the country in response to a
schedule of questions sent out by the Commission. The results ob-
tained by this branch of the investigation are presented in Chap-
ter III, which shows the contract and open-market prices to pub-
lishers in different localities in 1916 as compared with previous years.
The price statistics obtained from jobbers enabled the Commission
to ascertain their rates of commission and margins of gross profit
in 1916 as compared with prior years. These data are presented in
Chapter IV.
COST INQUIRY. One of the important questions involved in this
investigation was whether the increase in prices was justified by the
increase in the cost of manufacture. To determine this question the
Commission sent its agents to the offices of most of the manufacturers
in the United States and Canada and obtained the cost figures from
January 1, 1913, to June 30, 1916, directly from the books of the com-
panies, together with full information regarding the method of
handling costs. The Canadian manufacturers belonging to the News-
Print Manufacturers Association through courtesy furnished the
Commission with the same information as was furnished by the
United States companies. Costs have also been secured for a part of
the second six months of 1916.
Considerable difficulty was experienced in this phase of the in-
vestigation owing to the lack of uniformity in cost systems of dif-
ferent companies. In a few cases the records of the companies were
so incomplete that it was impossible to ascertain their costs.
In addition to obtaining cost figures for the three and one-half
years ending June 30, 1916, the Commission secured information re-
garding the profits of the manufacturers and their investments in
plants and woodlands. This was considered important in order to
ascertain whether prices prior to the recent rise had been too low,
as was claimed, and had yielded too small a return upon the invest-
ment in the business. It was very difficult, on account of the char-
acter of the records and the limited time for conducting the inves-
tigation, to determine accurately the real investment of the news-
print companies. The book investments, as a rule, threw little light
on this question because of inflations growing out of amalgamations,
reorganizations, etc.
The data regarding costs and profits are presented in Chapter V.
SUPPLY AND DEMAND FACTORS. In arriving at its conclusions re-
garding the causes of the increase in prices it was necessary for the
Commission to ascertain what changes had taken place in the relation
of supply to demand during the year 1916. For this investigation of
INTRODUCTION. 19
economic causes production, shipment, and inventory figures were
obtained from the manufacturers for the years 1913 to 1916, in-
clusive. Inventory figures were also obtained from jobbers. The
publishers of daily papers were asked to furnish figures showing the
receipts of paper and inventories for different dates, and most of
them furnished such figures as they could. Circulation figures were
obtained from the sworn returns of publishers to the Post Office De-
partment and statistics of advertising were obtained for the prin-
cipal newspapers in several of the largest cities.
The information collected by the Commission relative to the supply
and demand factors is presented in Chapter VI.
ACTIVITIES OF MANUFACTURERS AND JOBBERS. For the investigation
of alleged unfair or illegal activities of manufacturers and jobbers
the Commission's agents not only examined the contracts of all of the
principal manufacturers, selling agencies, and jobbers, but also the
correspondence files of the News-Print Manufacturers Association
and some of the more important members. Publishers also furnished
a considerable amount of valuable information relative to this
matter.
The findings of the Commission regarding this phase of the inves-
tigation are presented in Chapter VII.
CONCLUSIONS AND RECOMMENDATIONS. The conclusions of the Com-
mission were contained in its preliminary report to the Senate dated
March 3, 1917, and are repeated in Chapter VIII of this report.
The Commission's recommendations for the protection of publishers
during the continuance of the present abnormal conditions resulting
from the war are contained in the letter of submittal above and
also in Chapter VIII.
Section 5. Efforts for immediate relief of publishers.
An important fact brought out by the news-print paper investiga-
tion was that most of the output of low-cost mills was sold under
annual contracts to the large publishers of the country, while many
of the 2,000 small dailies and some 14,000 weeklies depended on the
open market or on high-cost mills for their supplies of news print.
In the latter part of 1916 these smaller papers in many cases had ex-
treme difficulty in obtaining a supply of paper except at prices which,
if maintained, would have driven them out of business.
The public hearing of the Commission on December 12, 1916, made
this situation so clear that at the opening of the afternoon session,
the manufacturers through their attorney requested suggestions from
the Commission as to some method of distributing their available
product that would take care of the small publishers. The willing-
ness of the associations of small publishers to forward some such
scheme of distribution was at once made evident. At the same time
20 EEPORT ON NEWS-PRINT PAPER INDUSTRY.
their representative said " We do not believe we can get this help or
this assistance unless it be through the cooperation of the Federal
Trade Commission as a mediary in this particular emergency."
In accordance with its established policy in cases where its as-
sistance is requested in cooperative efforts of business men to im-
prove competitive conditions, the Commission in pursuance of the
above suggestion arranged for conferences of committees represent-
ing publishers, manufacturers and jobbers. As a result of these
conferences the Commission at the close of the year instituted a
thorough canvass, which revealed very completely the immediate
needs of newspaper publishers without contracts. The manufac-
turers and large publishers, however, were unable to come to any
agreement through which a supply of paper could be secured for
distribution to small publishers under the supervision of the Com-
mission. As the Commission had no legal powers through which
the necessary paper could be obtained it was compelled to abandon
this effort to furnish immediate relief.
On January 26, 1917, a conference between manufacturers and pub-
lishers was held in Chicago at which the suggestion was made that
the Federal Trade Commission should arbitrate the question of what
was a fair and reasonable price for the sale of news-print paper.
Adopting this suggestion, several manufacturers in February, re-
quested the Commission to determine what was a fair price for stand-
ard news for the six-month period beginning March 1, 1917, and
agreed to abide by its decision. After conferences with publishers
and jobbers the Commission decided to undertake this task, and on
March 4, 1917, announced the prices which it had determined in a
report to the Senate of the United States. 1 Subsequent to this an-
nouncement, various complications arose which caused the plan to
fail. The details of these later developments are given in Chapter
VIII. (See p. 140.)
1 Senate Doc. No. 3, 65th Cong., special session.
CHAPTER II.
GENERAL DESCRIPTION OF THE NEWS-PRINT PAPER INDUSTRY.
Section 1. Introduction.
There are some 2,500 daily and Sunday and about 14,000 weekly
and semiweekly newspapers in the United States. The daily papers,
according to Census data for 1914, had a circulation of about 30,000,-
000 copies, the Sunday papers about 17,000,000. and the weeklies and
semiweeklies about 24,000,000. These newspapers range from the
largest metropolitan daily, with an average circulation for the six
months ending October 1, 1916, of more than 800,000 copies per day,
to the smallest country weekly, with a circulation of a few hundred
copies each week. These dailies and weeklies together furnish the
cheapest and most serviceable means of disseminating information,
general and local, to the 100,000,000 people in this country. Practi-
cally every town of any size in the country has at least one publica-
tion devoted especially to local affairs. For this reason the great
reading public has a special interest in whatever affects the welfare
of these publications.
DAILY NEWSPAPERS. The 2,500 daily newspapers, nearly 600 of
which have Sunday editions, have nearly 60 per cent of the total
circulation of all newspapers and consume the great bulk of the news-
print paper produced and imported. 1 There are 119 daily news-
papers in 32 of the 50 cities having 100,000 population or over, which
have an average daily circulation in excess of 50,000, according to
sworn statements to the Post Office Department for the six-month
period ending October 1, 1916. These 119 dailies have a total circu-
lation of 15,649,634 copies. The following tabulation groups them
according to circulation :
Group.
Number of
publications.
Combined
circulation.
400,000 and over
6
2 914 628
300,000-400,000
5
1 887,568
200,000-300,000
g
1 979 432
100,000-200,000
35
4 431 269
50,000-100,000
64
4 436 739
Total
119
15 649 634
1 More than 1,000 daily newspapers also have weekly or semiweekly editions.
22 REPORT ON NEWS-PRINT PAPER INDUSTRY.
These 119 daily newspapers represent about 50 per cent of the
total circulation of dailies. There are 430 other newspapers in the
United States having an average daily circulation of 10,000 or more
whose combined circulation is estimated at 7,500,000 and about
1,900 dailies having less than 10,000 circulation with an estimated
total of 9,000,000.
One hundred of the daily newspapers in the United States, or 4
per cent, are published in the two cities of New York and Chicago
and have a combined circulation of nearly 6,500,000, or about 20 per
cent of the total.
Practically all of the daily papers use roll news, most of which
is bought on contract.
WEEKLY NEWSPAPERS. The 14,000 weekly and semiweekly news-
papers use sheet news largely and purchase it in the open market.
On account of the large expense necessary to the gathering of news
and miscellaneous matter for the make-up and printing of such papers,
about 6,000 of the smaller weekly newspapers make use of what is
known as " ready print service." They buy their paper already
printed on one side or on two or more pages, and print the rest of
the paper themselves, using local news items. In addition to the
ready print service many of them use what is known as " plate
service " which is news matter furnished in the form of metal type
plates cast in column lengths which may be cut up and arranged at
the local office if desired.
There are several concerns which make a business of furnishing
ready print or plate services to publishers. The most important of
these are the Western Newspaper Union, Omaha, Nebr. ; the Ameri-
can Press Association, New York City; and the American Type
Founders Co., Jersey City, N. J. Other important ones are the
Publishers Press Association, Toledo, Ohio; United Weekly Press
Association, of Grand Rapids, Mich.; and Publishers Cooperative
Co., Chicago. The Western Newspaper Union has 30 branch offices
located in as many cities of the United States, extending from Boston
to Denver and Minneapolis to Houston. It supplies more than 90
per cent of the papers using ready print and in addition furnishes
large quantities of plate service to other publishers. At each of its
offices it does more or less printing of weekly newspapers, trade jour-
nals, magazines, etc., for other publishers. At the Chicago office alone
about 120 such publications are printed. In addition to being the
largest consumer of sheet news print in the United States, it is also
an important factor as a paper jobber, carrying stocks of printing
paper at nine of its branch offices and doing some jobbing business
in sheet news at each of its other branches. The jobbing business at
Omaha is conducted under the trade name of Western Paper Co.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY.
23
Section 2. Development of the news-print industry.
The manufacture of paper from wood pulp dates back to the
sixties, when the first machine for grinding wood was installed in this
country. Prior to this time the paper used for printing newspapers
was made of rags, straw, and other vegetable fibers. Poplar was
the first wood used for making pulp, and then spruce. The latter
has been found the most satisfactory of all of the woods for making
news print and is at present the most extensively used.
With the use of wood pulp for making news print there came a
rapid development in the industry. The estimated daily capacity
of domestic news-print mills increased from about 400 tons in 1880
to about 4,700 tons in 1916. According to the United States Census
reports, the quantity manufactured in domestic mills since 1899 and
the value of the product has been as follows :
Year.
Tons pro-
duced.
Value of
product.
Year.
Tons pro-
duced.
Value of
product.
1899
569, 212
$20,091,874
1909
1,175,554
$46,855,560
1904
912 822
35 906 460
1914
1 1,313,284
52, 942, 774
1 This figure includes about 30,000 tons of paper not classed by manufacturers as news print. The Com-
mission's production figure for 1914 was 1,282,934 tons.
The production of news-print paper in the calendar year 1916, De-
cember being estimated, was 1,355,196 tons.
KANK or INDUSTRY. The United States Census reports for 1914 rank
the paper and wood-pulp industry of the country as twentieth in total
value of products. News-print paper constituted about one-fourth of
the total paper tonnage shown, and somewhat less than one-sixth of
the total value. Other important grades of paper manufactured are
book, writing, wrapping, tissue, kraft, bag, etc. The total production
of the 45 United States companies making news-print paper in 1916 /
was found by the Commission to be 1,355,196 tons, -valued at more j
than $50,000,000. Of this paper about 75.000 tons were exported and
most of the remainder was used by newspapers. In addition, they
also used nearly 468,000 tons of Canadian paper, which was about 75
per cent of the total production of that country. The commercial
uses of news-print paper are largely for catalogues, telephone direc-
tories, railway guides, school tablets, handbills, wrapping paper, etc.
PERIOD PRIOR TO 1910. In the decade prior to 1900 the rapid
building of paper mills led to overproduction and a decline in
prices. In 1898 the International Paper Co. was organized. It
absorbed most of the mills east of the Mississippi River, with the
control of from two-thirds to three-quarters of the domestic output.
For two or three years after the organization of this combination
24 REPORT ON NEWS-PRINT PAPER INDUSTRY.
prices were firmer, but new mills were being built, and by 1901
prices again began a downward movement, which reached the lowest
point in 1906. The net earnings of the International Paper Co.
fell from $3,961,657 in the year ending June 30, 1901, to $1,623,616
in 1906-7. A representative of the company testified that the aver-
age gross receipts per ton on its sales had fallen from $42.52 in
1901 to $39.90 in 1906. The following year the average receipts per
ton advanced to $41.
In the latter part of 1907 and early in 1908 a great effort was made
to advance prices further. It was to some extent successful, and the
increase in the cost to some newspapers was very considerable. This
resulted in the appointment of a committee of the House of Rep-
resentatives, which, after a very full investigation beginning in the
spring of 1908, made its final report to Congress in February, 1909.
This report emphasized the scarcity of spruce in the United States
and the need for its conservation. It recommended that ground
wood should be admitted free from territory in which there was no
restriction on exports and that the duty on news print be reduced
to one-tenth cent per pound. On this point the report reads as
follows :
It can not be expected that Canada or its Provinces will re-
move the present discriminations as to the exportation of pulp
wood to the United States or cease from adding additional
discriminations unless we also lessen the tariff on the cheap
paper, which is made mainly from spruce wood.
The committee held that the duty of $2 per ton recommended by
it would offset the high cost of production in the United States.
PERIOD SUBSEQUENT TO 1910. Since 1910, although prices remained
above the 1906 level, the news-print industry in the United States
has barely held its own, only one large mill having been built.
On the other hand, several mills have been changing machines over
from news print to other grades, especially since 1913, the aggre-
gate loss to news-print production since 1910 probably amounting
to 500 tons a day. As a result there was a decline in the output
in 1914 and 1915, and prices also showed a downward trend. (See
pp. 61 to 68.)
In 1916 some revival occurred in the development of the domestic
industry. Prices rose and production increased more than 100,000
tons over the preceding year. Before the close of 1916 the Inter-
national Paper Co. completed the installation of two new machines
with a combined capacity of about 62 tons per 24-hour day, and
three additional machines with a combined daily capacity of 140
tons began operations in other mills during the first half of 1917.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 25
In marked contrast with the stationary condition of the news-
print industry in the United States during the last five years has
been the phenomenal development of the industry in Canada. Be-
tween 1910 and 1916 six new mills operating 10 machines were built,
with an estimated daily capacity of more than 500 tons. This in-
creased output of news print was largely exported to the United
States. One new machine with a daily capacity of 50 tons began
operation in November, 1916, and several new developments are
under way which will begin operations in 1917 and 1918.
According to a report of the American Newspaper Publishers
Association of March 24, 1917, the r,^v tmnage expected in the
United States and Canada during 191 i" c:: 1 I IS is as follows:
New tonnage, 1917 ( revised Mar. 22 ) : Tons per day.
Hawley Pulp & Paper Co., now running 50
Great Northern Paper Co., now running 50
Spanish River Pulp & Paper Mills
Now running 35
November 50
St. Maurice Paper Co.
Now running 50
April 50
Pacific Mills (Ltd.)
July 60
October 60
Price Bros. & Co.
November 65
May 50
Northwest Paper Co., April 50
Brompton Pulp & Paper Co., December 50
Ontario Paper Co.
Now running 50
November 50
Abitibi Power & Paper Co., December 175
Mill organizing, December 50
945
Tonnage for 1918 (revised Mar. 22) :
Laurentide Co. (Ltd.), Grand Mere, Province of Quebec, November-- 200
Price Bros. & Co., Kenogami, Province of Quebec, November 175
Lake Winnipeg Paper Co., November 200
Mill organizing, November 200
775
Future tonnage (uncertain as to time and quantity) :
International Paper Co., Three Rivers, Province of Quebec 200
Pic River and Nipigon Power 150
Kenora, Ontario (E. W. Backus) 200
550
26 REPORT ON NEWS-PRINT PAPER INDUSTRY.
The St. Maurice Paper Co. at Three Rivers, Quebec, is a subsidiary
of the Union Bag & Paper Co. The Pacific Mills (Ltd.), at Ocean
Falls, British Columbia, is a subsidiary of the Crown Willamette
Paper Co.
There is some doubt whether the mills reported as beginning op-
erations in November and December, 1917, will be completed b}^
that time. They represent a daily capacity of 440 tons.
Section 3. Process of production.
The basic material in the manufacture of paper is cellulose, which
is obtained in the form of plant fibers. In the case of news-print
paper the fibrous material is obtained from certain kinds of wood.
Spruce is most generally utilized, though hemlock, balsam fir, and
other kinds are used in some cases. The wood is cut usually in
winter and transported to the mill, when practicable, by floating the
logs down a stream. Shipment to the mill by rail and water also
is employed extensively. 1
The first step in the process after the logs have arrived at the
mill is that of removing the bark if this has not already been done.
This is accomplished by one of two types of machines. The first
type is called the tumbler, which consists of a large cylindrical drum.
Into this drum the logs, in 2-foot lengths, together with a suitable
quantity of water, are introduced. The drum is then caused to re-
volve, and the friction of the logs against the side of the drum and
against one another removes the bark. The second type is called
a barker, or rosser, and consists of a heavy iron disk, provided usu-
ally with three knives fixed to its surface and projecting about half
an inch from it. The disk is rotated rapidly and when the logs are
pressed against its surface the bark is shaved off by the knives.
The second is the more thorough method but is less economical,
because of the loss of the wood which is cut away. Sometimes the
logs are barked before they are shipped to the mill in order to save
freight.
After being barked the pieces of wood are converted either into
"mechanical" pulp or into "chemical" pulp. The former is not
suitable alone for paper making because it contains only about 55
per cent of cellulose and the fibers are too short and stiff to felt
or interlace together properly; hence it is mixed with a certain
quantity of chemical pulp which is pure cellulose with fibers of
greater length.
MECHANICAL PULP. Mechanical pulp or ground wood is produced
by applying the pieces of wood by hydraulic pressure to the face of
a large grindstone, usually about 54 inches in diameter and 27 inches
1 For a description of the process of the production of paper, see the Pulp and Paper
Magazine, Jan. 4, 1917, pp. 11-28.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 27
thick. This grindstone rotates at a high rate of speed within a cas-
ing, which is provided with pockets into which the pieces of wood
are introduced and pressed against the stone. If sufficient water is
introduced into the pit of the grinder the temperature can be kept
about at normal, but the usual practice in this country is to limit the
quantity of water admitted, so that the friction brings about high
temperatures. Experiments are reported to have been successfully
carried out with the lengthwise grinding of logs in order to obtain a
longer fiber in the ground wood. An important improvement in
ground wood equipment is the magazine grinder now in use in one
mill in the United States and one in Canada. This grinder feeds the
wood in automatically from above and not only economizes in floor
space but also in labor costs. The wood grinders are operated almost
exclusively by water power, the grindstones frequently being at-
tached directly to the turbine shaft. In other cases they are pro-
pelled by electricity.
The ground wood comes from the grinders in the form of slush,
which is then screened in order to remove the coarser particles. In
the older mills this screening is done in small troughs with fine
screen plates in the bottom. Rotary screening is now coming into
general use. The slush is run into a revolving cylinder with screen
plates in its surface. The centrifugal force throws the finer parti-
cles of slush through these screens. One great advantage of this sys-
tem is that the installation requires much less room than the older
one.
After the slush has been screened it is ready to be used for paper
making. Where the ground wood mill is a part of the paper mill or
not too far distant from the paper mill the ground wood slush is
piped in without converting into pulp. Where it is necessary to ship
the ground wood by rail it is compressed until from 30 to 50 per
cent of the water is squeezed out.
CHEMICAL PULP. Spruce wood, in addition to cellulose, contains a
considerable amount of nonfibrous material, which is dissolved and
separated from the cellulose by cooking the wood under pressure with
a solution of bisulphite of lime. This is known as the sulphite proc-
ess. The wood is first chipped up into small pieces by a machine
which consists of a massive iron or steel disk about 84 inches in
diameter with two or three steel knives projecting from the surface
of this disk and, radiating from the center. This disk is caused to
revolve rapidly, and the logs are applied to the surface of the disk,
usually at an angle of 45. The knives then chip off flakes of wood
from the end of the log at that angle.
There are two methods of preparing bisulphite of lime for use in
the sulphite process, designated, respectively, the " tower " system
and the " tank " system. In the tower system, which is in most gen-
28 REPORT ON NEWS-PRINT PAPER INDUSTRY.
eral use, sulphur is burned in specially constructed ovens with a
limited amount of air so as to form sulphur dioxide gas. This is
run out through pipes, which enter into a tank of water to cool the
gas and then into tall towers, usually of wood, with a lining of lead.
These towers may be considerably over 100 feet in height and from 5
to 10 or more feet in diameter. The towers are filled with blocks of
limestone, and a continuous stream of water is introduced from the
top of the tower. As the gas passes upward through the limestone it
enters into combination with the water and lime, so that the liquid
flowing out at the bottom of the tower is a solution of bisulphite of
lime.
In the tank system, otherwise called the " milk-of-lime " system,
water and lime are mixed in a large vat, and the sulphur-dioxide gas
is forced into the mixture to form bisulphite of lime. The process
varies in detail, of course, from plant to plant. An amount of sul-
phur approximating from 300 to 350 pounds is required in the pro-
duction of a ton of air-dry pulp.
The chemical process of making sulphite is conducted in large
boilers, commonly called " digesters." These may be of varying
type, but the one in almost universal use is a tall cylindrical vessel,
sometimes being of sufficient size to produce from 11 to 16J net
tons of pulp. The digesters are constructed of boiler plate and are
lined with acid-resisting brick or tile set in acid-proof mortar. This,
of course, is to prevent the acid developed in the process from corrod-
ing the metal of which the digester is constructed, but has also the
further advantage of effecting a considerable saving in steam, because
of the fact that this lining acts as a heat insulator. The digesters
taper to a cone at the top and bottom ends.
The process of cooking varies considerably in different plants. In
general, after the chips of wood and the bisulphite of lime have been
introduced, the manhole is closed, and steam is gradually forced in
at the bottom. This is continued until the steam pressure reaches
about 80 pounds and the temperature about 365 . 1 The process of
cooking is continued about eight hours. At the end of the cooking
process the outlet at the bottom of the digester is opened, and the
steam pressure quickly forces the material out into a large bin with a
screen bottom, through which the liquid drains off. At this point the
pulp usually is washed for about three hours by means of water de-
livered at the top of the bin. The ligneous and resinous portions of
the wood, being in solution, to great extent are washed away. Spruce-
wood pulp obtained in this manner contains about 88 per cent of
cellulose, while untreated spruce wood contains only about 55 per
cent.
1 Dept. of Com., Bur. of For. & Dom. Com., Special Agents Series, No. 110, p. 47.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 29
Following this the chemical pulp is screened to remove coarse
fibers, knots, slivers, and the like, in much the same manner as the
mechanical pulp.
PAPER MAKING. The paper-making process proper begins in the
"beaters," where the various component substances of the finished
product are mixed.
The beaters are large receptacles of various types, the important
common characteristic of which is a cylindrical roll fitted with steel
or bronze blades, which revolves over a stationary concave bedplate
equipped with similar blades. The pulp is caused to circulate in
the vat so that all of it will pass under this roll about an equal
number of times. At the beginning of the operation the roll is raised
slightly above the bedplate and then gradually lowered as the opera-
tion is continued, until the fibers have been sufficiently torn apart,
and the various ingredients have been thoroughly mixed.
In the case of news-print paper the proportion of mechanical to
chemical pulp varies according to the quality of the paper desired, type
of machines, etc. On the average about 80 per cent of mechanical
pulp is mixed with about 20 per cent of chemical pulp. Various
other ingredients are also introduced, such as talc or china clay
which is used as a filler to render the paper more opaque, and to give
it a smoother surface, and liquid rosin, which is used to " size " the
paper so that the printing ink will not be absorbed and thus cause
the impressions to become blurred. Red and blue aniline dyes are
added, when obtainable, to make the paper white. Alum is also
added to precipitate the rosin and the coloring matter upon the fibers.
Owing to the greater cost of sulphite ordinarily only a sufficient
quantity is used to give the news print such tensile strength that it
will run through the paper machines and the printing presses without
breaking.
In some plants the beating process is shortened somewhat by the
use of the so-called Jordan refining engine. This machine consists
of a hollow cone equipped on its interior surface with blades and
another smaller cone with blades on its exterior surface. The
smaller cone revolves within the larger one, and the pulp is reduced
to the desired consistency by the action of the blades against each
other.
After the beating process has been completed the pulp, very much
diluted with water, is run into a so-called stuff chest, in which it is
kept in constant motion to prevent the pulp from settling to the
bottom. From this chest the pulp or slush passes through a strainer
and into a long narrow box placed at the head of, and across the full
width of, the paper machine. Thence it overflows onto a wire- screen
30 REPORT ON NEWS-PRINT PAPER INDUSTRY.
belt consisting of fine copper wires, woven with 60 or 70 meshes to
the inch. The length of this screen is often 75 feet and the width
150 or more inches. This belt moves forward on a series of 3-inch
rolls, and also has a lateral shaking motion. The pulp settles down
upon this screen in the form of a wet sheet, much of the water
draining through the mesh of the screen. Toward the farther end
of the screen it passes over several vacuum boxes, which cause still
more moisture to be sucked out through the screen. The speed at
which the screen is run is as high in some cases as 680 feet per
minute.
When the slush is run onto the wire screen difficulty is caused by
reason of the fact that the speed of the slush is less than that of the
screen. This has a tendency to cause ripples in the sheet to be
formed. This difficulty has been obviated for the most part by
the use of a new principle of operation known as the Eibel process,
patented in 1907, in accordance with which the screen is inclined,
so that the sheet is carried in a downhill direction. The action of
the force of gravity thus causes the sheet to maintain the same speed
as the screen, and the screen merely supports the sheet.
At the end of the screen the sheet passes between two rolls called
the couch rolls, the upper one of which is covered with a felt
jacket. From the screen belt the sheet runs onto a woolen belt.
Thence it passes between a series of so-called press rolls, the purpose
of which is to squeeze out further quantities of water. Finally, the
sheet is run over several large hollow cast-iron cylinders 3 or 4 feet
in diameter, heated internally by steam. These rolls dry the paper
thoroughly. The sheet then passes through the calendar rolls, which
polish the surface, and is wound upon a roll. The rolls of paper
later are removed and rewound upon cores, the paper being trimmed
and cut to the proper width at the same time. They are then re-
moved to the finishing room, where they are wound with heavy wrap-
ping paper to protect them in shipment. 1
Section 4. Domestic and Canadian companies.
There were on January 1, 1916, about 45 companies in the United
States engaged in the manufacture of news-print paper, which to-
gether operated 63 mills, and 15 companies in Canada, which to-
gether operated 17 mills. Ten of the United States companies did
not have sulphite plants and four did not have either sulphite or
ground-wood plants. All of the Canadian companies but one had
ground- wood mills, but four did not have sulphite plants.
1 For a description of the parts of a paper machine, see Paper, Apr. 26, 1916, pp. 13-16.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 31
The International Paper Co., which is the largest manufacturer in
the United States, has 9 mills which Are operated almost entirely on
news print and 2 or 3 mixed mills, making other grades as well as
news. These mills are located in Maine, New Hampshire, Vermont,
Massachusetts, and New York.
The Great Northern Paper Co., which is the next largest manu-
facturer in the United States, has 2 news-print mills located at Mil-
linocket and East Millinocket, Me., and 1 mixed mill, which makes
some news, located at Madison, Me.
The Minnesota & Ontario Power Co. operates a large mill at Inter-
national Falls, Minn., and controls the Fort Frances Pulp & Paper
Co. (Ltd.), in western Ontario, Canada. The Crown Willamette
Paper Co. operates 2 mills located at West Linn, Oreg., and Camas,
Wash., and also controls the Pacific Mills Co. (Ltd.), which has a
new mill about ready to begin operations at Ocean Falls, British
Columbia.
These four large companies in 1916 produced about 55 per cent of
the total domestic output.
The largest Canadian manufacturer is the Spanish Kiver Pulp &
Paper Mills (Ltd.), which controls the Lake Superior Paper. Co.
(Ltd.). The combined companies have 3 mills making news print,
located at Sault Ste. Marie, Sturgeon Falls, and Espanola, Ontario,
Canada. The next largest Canadian manufacturers are the Lauren-
tide Co. (Ltd.), at Grand Mere, Quebec; Powell Kiver Co. (Ltd.),
at Powell River, British Columbia; Price Bros. & Co. (Ltd.), at
Kenogami and Jonquiere, Quebec; and the Abitibi Power & Paper
Co. (Ltd.), at Iroquois Falls, Ontario, which did not begin operation
on news until the middle of 1915.
PRODUCTION AND SHIPMENTS. The tons of news-print paper pro-
duced and shipped by the principal companies in the United States
and Canada and the total production and shipments of all mills in
each country are shown in Table 1 below for the calendar years
1913, 1914, 1915, and 1916. The figures for the companies shown in
detail and for some others were obtained directly from their books.
Some of the figures included in the item " all others " were obtained
by correspondence with the manufacturers. The companies are
arranged in order of tons produced in 1916. Every company known
to have produced any news print during the 4-year period has been
included in the total figures.
32
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE l.-PRODUCTION AND SHIPMENTS OF NEWS-PRINT PAPER BY PRINCIPAL
UNITED STATES AND CANADIAN COMPANIES, 1913-1916.
19
13
19
14
Production.
Shipments.
Production.
Shipments.
United States:
International Paper Co. ... ...
Tons.
402, 763
Tons.
423,106
Tons.
379, 810
Tons.
379 342
Great Northern Paper Co
150, 082
147, 242
169, 082
172 347
Crown Willamette Paper Co
86,343
78,190
75,779
80,009
Minnesota & Ontario Power Co
65.181
65,435
64,124
63,028
Remington Paper & Power Co
44,954
43, 074
45,914
46,583
De Grasse Paper Co .*
35, 146
35,196
40, 872
40,872
Berlin Mills Co
62,334
62,880
51,583
52,013
St Croix Paper Co . ...
37. 042
37,626
40, 311
40,733
Peiepscot Paper Co
35,000
35,000
23,406
24,293
Consolidated Water Power & Paper ("o
29. 439
29, 577
30,428
29,894
Finch, Pruyn & Co. (Inc. )
32,250
32, 367
30,677
31,356
St Regis Paper Co
36,009
37,720
41,512
42,393
Tidewater Paper Mills Co
26,848
27,338
27,492
27,060
Gould Paper Co
19,217
18, 497
23,666
22,313
All others (31 companies) . . .
241,987
240, 015
238,278
235,750
Total United States
1,304,595
1,313,263
1,282.934
1,287,986
Canada:
Spanish River Pulp & Paper Mills ( Ltd }
i 109,000
1 105,000
118,894
118, 332
Powell River Co (Ltd.)
43,959
39, 140
44, 767
45,552
Laurentide Co. (Ltd.)
62, 269
* 61,919
64,260
64,439
Price Bros & Co (Ltd )
26,369
24,602
42,808
42, 754
Belgo-Canadian Pulp & Paper Co. (Ltd.)
Fort Frances Pulp & Paper Co (Ltd ) *
36,380
36,392
36,465
16,067
36,358
15,033
J R Booth
35,355
34,313
37, 015
36,916
Donnacona Paper Co (Ltd )
7,480
9,317
All others (6 companies)
37, 115
37, 115
47,236
47,236
Total Canada
350. 447
338, 481
414.982
415,937
Total 3 United States and Canada . .
1.655 012
1,651,744
1,697,916
1,702,923
i Estimated.
Subsidiary of Minnesota & Ontario Power Co.
'These totals may include a very small tonnage of paper other than news prink
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 33
TABLE 1. PRODUCTION AND SHIPMENTS OF NEWS-PRINT PAPER BY PRINCIPAL
UNITED STATES AND CANADIAN COMPANIES, 1913-1916 Continued.
ir
L5
191
6i
Companies.
Production.
Shipments.
Production.
Shipments.
United States:
Torn.
340,236
TOM.
344,549
TOM.
373,263
TOM.
383,448
Great Northern Paper Co
181, 880
188,720
197,533
193,677
Crown Willamette Paper Co
76,958
80,218
94,089
108,977
Minnesota & Ontario Power Co
59,096
60,583
87,042
87,441
Remington P&ppr &. Power Co
33,110
32,053
49,426
49,550
De Grasse Paper Co
46, 598
47,831
43,909
43,909
Berlin Mills Co
44,809
45,678
40,882
42,047
St Croix Paper Co
40,628
41, 117
39,190
39,268
Pejepscot Paper Co
37,277
38,015
38,709
38,649
Consolidated Water Power & Paper Co
35,481
35,638
36,816
37,155
Finch Pruyn & Co. (Inc.)
32,731
33,930
32,383
32,705
St. Regis Paper Co
22,249
26,794
31, 116
31,493
Tidewater Paper Mills Co .
27, 151
27,223
28,798
26,736
Gould Paper Co ...
26,088
26, 110
25,767
25,253
All others (31 companies)
234,830
239, 741
236.273
238,923
Total United States
1 239,122
1,268,200
1, 355, 196
1,374,221
Canada:
Spanish River Pulp & Paper Mills (Ltd.)
Powell River Co. (Ltd.)
115,269
50,307
115, 434
51, 1M
130,436
64,113
132,932
65,307
Laurentide Co (Ltd )
65,648
65,573
63,037
62,808
Abitibi Power & Paper Co. (Ltd.) . . .
17,971
16,866
62,071
62,053
Price Bros. & Co. (Ltd.)
47,279
45,318
53,523
55.893
Belgo-Canadian Pulp & Paper Co. (Ltd.)
38,204
38,155
50,725
51,166
Fort Frances Pulp & Paper Co. (Ltd.) 3
31, 696
32,487
39,430
39,497
J R Booth
35.363
35,300
38,679
38,658
Donnacona Paper Co. (Ltd.)
14,470
14,685
18,242
17,733
All others (6 companies)
72, 414
75,567
87,720
88,179
Total Canada
488, 621
490,485
607,976
614,226
Total 4 United States and Canada. .
1, 727, 743
1, 758, 685
1,963,172
1,988,447
1 The production and shipments for the month of December, 1916, were estimated by the companies.
2 Began operations in 1915.
* Subsidiary of Minnesota & Ontario Power Co.
These totals may Include a very small tonnage of paper other than news print.
The table shows that the 14 United States companies having an
output of more than 25,000 tons each in 1916 produced in the aggre-
gate more than 82 per cent of the total domestic production, while
the 31 smaller companies included in the item " all others " produced
less than 18 per cent. Likewise in 1916 the 9 Canadian companies
shown in the table produced more than 85 per cent of the Canadian
production, while the remaining 6 companies produced less than 15
per cent.
The four largest companies in the United States in 1916 produced
the following percentages of the total domestic production and of the
total production on the North American Continent :
88569 17 3
34
REPORT ON NEWS-PRINT PAPER INDUSTRY.
Company.
Tons pro-
duced.
Percentage
of United
States
output.
Percentage
of output
of North
American
Continent.
International Paper Co
373, 263
27.6
19.0
Great Northern Paper Co. . .
197,533
14.6
10.1
Crown Willamette Paper Co. . .,
94,089
6.9
4.8
Minnesota & Ontario Power Co .
87,042
6.4
16.4
Total.
751, 927
55.5
40.3
1 Including 39,430 tons of the Fort Frances Pulp A^Paper Co. (Ltd.) of Canada, a subsidiary of the
Minnesota & Ontario Power Co.
The Spanish River Pulp & Paper Mills (Ltd.), which was the
largest Canadian manufacturer in 1916, produced 130,436 tons of
news-print paper, or 21.5 per cent of the total Canadian output and
6.6 per cent of the total output of the North American Continent.
Domestic production decreased about 65,000 tons during the years
1913 to 1915. The production for the whole year 1916, December
being estimated, exceeded that of 1913 by about 50,000 tons and that
of 1915 by 116,000 tons. This was accomplished in spite of an actual
decrease in the number of mills in operation.
Canadian production increased about 138,000 tons during the
years 1913 to 1915, and the 1916 production, December being esti-
mated, was about 120,000 tons greater than for the preceding year.
This great increase in production was accomplished chiefly by build-
ing new mills and adding new machines to old mills. More than 75
per cent of the Canadian output finds a market in the United States.
The total production for United States and Canada in 1916,
December being estimated, was nearly 1,964,000 tons, or an increase
of more than 235,000 tons over 1915. This increase is equivalent to
nearly 760 tons a day, allowing 310 working days a year.
Shipments showed movements similar to those of production. In
general they were slightly larger than the tonnage produced, owing
in part to some duplication caused by companies buying from one
another, which could not be eliminated, and in 1915 and 1916 to a
decrease in stocks on hand.
EQUIPMENT. Table 2 below shows the equipment of the ground-
wood, sulphite, and paper mills of the 16 largest United States news-
print manufacturers and the 11 largest Canadian manufacturers on
January 1, 1916. These figures were compiled from Post's Paper
Mill Directory, Lockwood's Directory of the Paper and Stationery
Trades, and from information obtained directly from the companies.
The figures for the maximum 24-hour capacity of grinders, digesters,
and paper machines are estimates. The ratings for the paper
machines are those used by the News Print Manufacturers* Associa-
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY.
35
tion in its statistical reports. The ground- wood and sulphite equip-
ment of most of the companies shown is in excess of the news-print
requirements, some of these materials being sold or used in making
other grades of paper. The Fourdrinier paper machines, on the other
hand, are those running wholly or partly upon news print.
TABLE 2. EQUIPMENT OF 16 UNITED STATES MANUFACTURERS AND 11 CANADIAN
MANUFACTURERS OF NEWS-PRINT PAPER IN 1916.
Companies.
Ground wood.
Sulphite.
News print.
Mills.
Grinrl-
ers.
24 -hour
capac-
ity.
Mills.
Digest-
ers.
24 -hour
capac-
ity.
Mills.
Paper
ma-
chines.
24 -hour
capac-
ity.
United States:
International Paper Co
23
4
5
1
1
1
2
2
3
1
273
102
81
24
24
30
22
26
24
36
20
Tons.
1,270
410
366
168
125
150
175
140
60
180
137
8
2
44
16
4
4
4
2
4
Tons.
470
200
205
120
35
120
60
35
12
3
2
1
1
1
1
2
2
3
1
1
1
1
1
50
14
8
2
4
3
3
4
4
5
3
2
4
3
2
2
Tons.
1,500
604
250
220
175
160
131
132
120
158
106
92
145
84
62
55
Great Northern Paper Co .
Crown Willamette Paper Co. . .
Minnesota & Ontario Power Co.
De Grasse Paper Co
Berlin Mills Co
St. Croix Paper Co
Pejepscot Paper Co
Consolidated Water Power &
Paper Co
Remington Paper & Power Co.
Finch, Pruyn & Co. (Inc.)
Tidewater Paper Mills Co
1
3
42
St. Regis Paper Co
3
4
2
1
33
20
17
11
200
114
93
60
2
1
1
6
3
2
90
45
50
Gould Paper Co
Northwest Paper Co
Wisconsin River Paper &
Pulp Co
Total, 16 U. 8. companies . . .
Canada:
Spanish River Pulp & Paper
Mills (Ltd.)
54
3
1
1
1
3
1
1
1
1
2
1
743
60
37
20
24
36
26
22
15
12
41
12
3,654.
390
250
250
220
240
160
160
100
75
240
50
24
2
1
1
1
1
1
109
4
4
2
2
2
4
2
1,472
135
110
60
50
60
125
.so
34
113
3, 994
444
200
225
225
180
135
127
150
50
55
40
3
1
1
1
2
1
1
1
1
1
10
6
4
4
4
3
4
2
1
1
Laurentide Co. (Ltd.)
Abitibi Power & Paper Co.
(Ltd.)
Powell River Co. (Ltd )
Price Bros. & Co. (Ltd.).
J R Booth
Belgo-Canadian Pulp & Paper
Co (Ltd )
Fort Frances Pulp & Paper
Co (Ltd )
Donnacona Paper Co. (Ltd.) ..
Brompton Pulp & Paper Co.
(Ltd.)
1
1
30
Canada Paper Co. (Ltd.)
Total, 11 Canadian companies
Total, 16 United States and
11 Canadian Companies..
16
305
2,135
9
21
620
14
40
1,831
70
1,048
5,789
33
130
2,092
48
153
5,825
36
REPORT ON NEWS-PRINT PAPER INDUSTRY.
The 16 largest domestic manufacturers, whose combined output
represents more than 85 per cent of the total production of the United
States, together operated 54 ground-wood mills equipped with 743
grinders, 24 sulphite plants equipped with 109 digesters, and 34
paper mills having 113 Fourdrinier machines running on news print.
Some of these companies had other mills and other machines not
running on news print. Three of these large companies did not have
sulphite plants, and one did not have either a sulphite or ground-
wood mill.
The 11 Canadian manufacturers, operated 16 ground-wood mills
equipped with 305 grinders, 9 sulphite plants equipped with 21
digesters, and 14 news-print mills equipped with 40 paper machines.
Three of the companies did not have sulphite plants, but all were
equipped with ground-wood mills.
The 24-hour capacity of mills shown in the table is considerably
in excess of the actual production of news print, since this is a max-
imum figure and also since some of the machines are only run part
of the time on this grade. For instance, in 1916 the International
Paper Co. produced at the rate of 1,200 tons per day, allowing 310
working days in the year, although shown in the table as having a
capacity of 1,500 tons.
The speed, in feet per minute, and the maximum width of sheet in
inches, of the 113 paper machines operated on news print by 16
United States companies, is shown by the following tabulation :
SPEED PER MINUTE AND MAXIMUM WIDTH OF TRIM OF 113 PAPER MACHINES OF 16
UNITED STATES COMPANIES, 1916.
Speed per minute.
Number of
machines.
Width of trim.
Number of
machinos.
300to399feet
11
70 to 79 inches . .
14
400 to 424 teet
4
80 to 89 inches
g
425 to 449 feet
7
90 to 99 inches
10
450 to 474 feet
15
100 to 109 inches
13
475 to 499 feet
10
110 to 119 inch PS
15
500 to 524 feet
14
120 to 129 inches
10
525 to 549 feet
5
130 to 139 inches
6
550 to 574 feet
22
140 to 149 inches
27
575 to 599 feet
9
150 to 159 inches
3
600 to 649 feet
14
160 to 169 inches
5
650to699feet
2
170 to 179 inches
1
Eleven of the machines of the 16 principal domestic companies had
a speed of less than 400 feet per minute and 36 others had a speed
less than 500 feet per minute. Fifty had a speed between 500 and
600 feet and 16 a speed above 600 feet. Thirty-three of the ma-
chines had a maximum trim of less than 100 inches, 71 machines
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY.
37
had a maximum trim between 100 and 150 inches, and 9 machines
had a trim above 150 inches.
The newer machines, as a rule, have a wider trim and higher speed
than the older machines, so that the above figures are a good index
of the character of the equipment of the principal manufacturers.
For comparative purposes the speed of machines and width of
sheet are given in the tabulation below for the 40 Fourdrinier ma-
chines operated on news print by the 11 principal Canadian manu-
facturers :
SPEED PER MINUTE AND MAXIMUM WIDTH OF TRIM OF 40 PAPER MACHINES FOR 11
CANADIAN COMPANIES, 1916.
Speed per minute.
Number of
machines.
Speed per minute.
Number of
machines.
475 to 499 feet
1
575 to 599 feet
5
500 to 524 ieet
3
600 to 624 feet
19
525 to 549 Ieet
625 to 649 feet
4
550 to 574 feet . ...
1
650 to 699 feet
7
Width of trim.
Number of
machines.
Width oi trim.
Number of
machines.
80 to 89 inches
1
140 to 149 inches
11
90 to 99 inches .
1
150 to 159 inches
5
100 to 109 inches
4
160 to 169 inches
110 to 119 inches
7
170to 179 inches
6
120 to 129 inches
180 to 189 inches
1
130 to 139 inches
2
190 to 199 inches
2
The tabulation shows that 30 of the 40 machines operated by Cana-
dian companies have a speed above 600 feet per minute, and 25 of the
40 machines have a trim above 140 inches. These figures do not in-
clude the new machine of the Donnacona Paper Co., which began
operations on November 1, 1916. This machine is said to have a speed
of 600 to 625 feet per minute and a maximum width of sheet of 148
inches.
CONSUMPTION OF RAW MATERIALS. Information obtained from 12
principal United States companies and 9 principal Canadian com-
panies shows that in 1915 they used the following quantities of sul-
phite and ground wood in producing news-print paper :
Companies.
News
print
pro-
duced.
Ground wood used.
Sulphite used.
Percent-
age of
sulphite
to total
pulp.
Total.
Quantity
per ton
of paper.
Total.
Quantity
per ton
of paper.
12 United States companies
Tom.
954, 892
416, 207
Tons.
767,458
328, 302
Tom.
0.804
.789
Tons.
224,652
109,445
Tons.
0.235
.263
22.6
25.0
9 Canadian companies. ..
Total, 21 companies combined
1,371,099
1,095,760
.799
334,097
.244
23.4
38
REPORT ON NEWS-PRINT PAPER INDUSTRY.
The 12 United States companies produced 77 per cent of the total
domestic output of news-print paper in 1915 and the 9 Canadian
companies more than 85 per cent of the total Canadian output.
United States companies used on the average 0.804 of a ton of ground
wood and 0.235 of a ton of sulphite in making a ton of paper. Cana-
dian companies used 0.789 of a ton of ground wood and 0.263 of a
ton of sulphite, and United States and Canadian companies com-
bined used 0.799 of a ton of ground wood and 0.244 of a ton of
sulphite in a ton of paper.
The average percentage of sulphite to total pulp used for United
States and Canadian companies combined was 23.4 per cent. The
average for domestic mills was 22.6 per cent and for Canadian mills
25 per cent. Applying the proportions of the two raw materials
used by the principal companies to the total production of news-
print paper in the United States and Canada, a fairly close estimate
is obtained of the total quantity of ground wood and sulphite used
by all companies in both countries in making news-print paper in
1915. This is shown by the following tabulation:
Companies.
News
print
produced.
Ground
wood
used.
Sulphite
used.
All United States companies
Tons.
1, 239, 122
Tom.
995 897
Tons.
291 521
All Canadian companies .
488, 621
385, 375
128, 487
Total United States and Canadian companies combined
1,727,743
1,381,272
420.008
The wide variation existing in the percentage of sulphite to total
pulp used by different companies is shown by Table 3, which presents
the data for 12 principal United States companies anc\ 9 principal
Canadian companies for 1915 and the first half of 1916.
TABLE 3. PERCENTAGE OF SULPHITE TO TOTAL PULP FOR 12 PRINCIPAL UNITED
STATES COMPANIES AND 9 PRINCIPAL CANADIAN COMPANIES, 1915-1916 (FIRST
HALF).
United States companies.
1915
First
half
1916.
Canadian companies.
1915
First
half
1916.
1
33.4
34 5
1
27.2
28.3
2
28.4
31.2
2
24.9
27.4
3
26.4
28.5
3 .
25.9
4
28 4
27 6
4
25 8
25 2
5
24.8
23.1
5
25.3
24.7
g
22
21 3
6
23.9
24
7
22.2
20.6
7
23.7
23.7
g
21 3
20 3
8
23.9
23.4
9
18.9
19.5
9
21.3
23.3
1Q g
10 7
23 7
14 9
Average
25.0
25.0
12
13.3
12.8
Average for 12 United States
and 9 Canadian companies.
23.4
23.3
Average .............
22.6
22.4
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY.
39
The table shows that the percentage of sulphite used by the 12
United States mills in the first half of 1916 ranged from 12.8 per
cent to 34.5 per cent with an average of 22.4 per cent, and by the 9
Canadian mills from 23.3 per cent to 28.3 per cent with an average
of 25 per cent. The percentage of sulphite necessary to make paper
is affected by the method of treating ground wood, the character of
the equipment, etc. The paper must have sufficient tensile strength
to run through the paper machines without breaking, otherwise the
daily output of the machines will be reduced. This fixes a minimum
below which it is not economical to reduce the percentage of sul-
phite used.
The 12 United States mills taken together used slightly less sul-
phite in the first half of 1916 than they did in 1915, while the Cana-
dian mills used the same proportion in each period. Information ob-
tained from some of the United States companies for a part of the
second half of 1916 indicates that there was a further decrease in the
percentage of sulphite used during that period.
From data collected by the Commission an estimate has been made
of the average quantity of rough wood used by news-print companies
in making sulphite, ground wood, and news-print paper in 1915.
Peeled wood and rossed wood have been converted to the rough-wood
basis by using the best estimates available. Keports from the 12
United States companies and the 9 Canadian companies show the
following results :
Companies.
Cords used
in ton of
ground
wood.
Cords used
in ton of
sulphite.
Cords used
in ton of
news-
print
paper.
12 United States compai
9 Canadian companies . .
lies
1.08
1.16
2.12
2.15
1.36
1.48
Total, 21 compani
ss combined
1.10
2.13
1.40
If the percentages shown in the preceding tabulation for 21 com-
panies are applied to the total production of ground wood, sulphite,
and news-print paper for all companies in the United States and
Canada, the total cords of rough wood used would be as follows:
Companies.
Cords of
wood used
in ground
wood.
Cords of
wood used
in sul-
phite.
Cords of
wood used
in news-
print paper.
All United States companies
1 073 834
617 170
1 691 004
All Canadian companies .. .
447, 497
276, 135
723 632
Total United States and Canadian companies combined
1,521,331
893,305
2,414,636
40 REPORT ON NEWS-PRINT PAPER INDUSTRY.
Considerable variation exists in the quantities of wood used by
different companies in producing a ton of paper. For instance,
reports from companies in the United States show that considerably
over half of the paper included in the tabulation above was produced
from about 1J cords of rough wood per ton, although one company
which produced a little over 8 per cent of the paper used about If
cords per ton. In this connection it is important to note that the
use of a large quantity of wood does not necessarily mean a high
wood cost per ton of paper, because, as a rule, the cheaper the wood
the more freely it may be used. For example, the detailed figures
for two of the large producers show that in 1915 one used 42 per
cent more wood than the other, while the cost of its wood per ton of
paper was only 15 per cent greater. In the first half of 1916 it used
more than 42 per cent more wood, while the cost of its wood per ton
of paper was only 6 per cent greater than that of the other producer.
Both companies produced their paper at a very low cost.
It is to be noted also that if the present high prices of wood con-
tinue, processes of manufacture that economize wood will probably
be adopted. The possible economy in wood through such processes
is indicated by the following excerpt from the Paper Trade Journal
of November 30, 1916, which relates to a recently invented but well-
tested process :
The quantity of final rejection is very small, 200 tons of fin-
ished paper showing a yield of sand, knots, bark, etc., of about
200 pounds, when using 140 cords of peeled spruce to produce
the 200 tons of paper.
By this process apparently a ton of paper can be produced from
0.7 of a cord of peeled spruce (about 0.8 of a cord of rough wood)
as compared with 1.40 cords shown above.
Section 5. News-Print Manufacturers Association.
The News-Print Manufacturers Association is a voluntary asso-
ciation organized April 1, 1915, and composed of nearly all the im-
portant news-print and hanging paper manufacturers on the North
American Continent. Prior to 1915 these manufacturers constituted
a division of the American Paper & Pulp Association.
The secretary of the association is George F. Steele, whose princi-
pal duty is to accumulate and disseminate to members information
concerning materials, processes, machinery, improvements, etc., and
statistical data covering stocks on hand, quantities produced, and
quantities shipped.
The News-Print Manufacturers Association is managed by an
executive committee of five members, who represent 51 per cent of
the total output of all its members, which in 1916 represented about
82 per cent of the total production of news print in the United
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 41
States and Canada. The members of the executive committee and
the 1916 output of news print represented by each are shown in the
tabulation below :
Members of executive
committee.
Name of company.
Position in
company.
1916
production.
Philip T. Dodge
International Paper Co
President
Tons.
373 263
George H. Mead
Spanish River Pulp & Paper Mills (Ltd.)
.. -do
The Lake Superior Paper Co. (Ltd.)
do
130,436
The George H. Mead Co., Dayton, Ohio.
. .do.
Sales agent for the above and also for the
Abitibi Power & Paper Co. (Ltd.)
62 071
J. H. A. Acer
Lauren tide Co (Ltd.)
Treasurer and
63 037
E. W. Backus
Minnesota & Ontario Power Co .
sales mana-
ger.
President
87 042
Fort Frances Pulp & Paper Co. (Ltd.) .
.do..
39,430
G. H. P. Gould .
Gould Paper Co .
do
25 767
St. Regis Paper Co. 1 ...
.do
31, 116
Donnacona Paper Co. (Ltd )
do
18 242
Total represented by executive committee . . .
830,404
!Thls company was sold in December, 1916.
The total production of news-print paper on the North American
Continent in 1916, as shown by Table 1, above, was 1,963,172 tons.
Of this tonnage, 1,616,307 tons, or more than 82 per cent of the total,
were produced by members of the association.
The principal companies outside of the association, and their
production in 1916, were as follows:
Companies outside association.
Produc-
tion in 1916.
Companies connected with newspapers: l
Ontario Paper Co. (Ltd.), (Chicago Tribune)
DeGrasse Paper Co. (New York World)
News Pulp & Paper Co. (Ltd.), (Montreal Star).
Other companies:
Great Northern Paper Co
Tidewater Paper Mills Co
Alexandria Paper Co
Inland Empire Paper Co
Nine other small companies
Tons.
82/741
197,533
28,798
14,971
11, 113
10,709
Total.
346,865
1 The Itasca Paper Co., Grand Rapids, Minn., was purchased by the St. Paul Dispatch and Pioneer
Press in September, 1916.
The organization of the News-Print Manufacturers Association and
the concentration of control through the executive committee has led
42 REPORT ON NEWS-PRINT PAPER INDUSTRY.
to less competition in the industry. For further information on this
point see Chapter VII. This result has been aided by the existence of
several selling agencies and jobbers who handle the output of various
mills. For instance, as shown above, the George H. Mead Co. in 1916
handled 192,507 tons of Canadian paper. H. G. Craig & Co., another
selling agency, in 1916 represented 9 different mills, being the ex-
clusive agent of several of them. The aggregate tonnage thus con-
centrated amounted to more than 100,000 tons. The Manufacturers
Paper Co. also sold the output of several mills. Neither of these
last two concerns is directly represented on the executive committee
of the News-Print Manufacturers 'Association.
In 1916 there was formed the Canadian Export Paper Co., the pur-
pose of which was to pool the export business of several Canadian
companies. 1 This group will be represented on the executive com-
mittee by the Laurentide officer, at present on the committee, and will
probably control one-third of the entire Canadian output of news-
print paper.
Section 6. Paper jobbers and sales agents.
There are two kinds of middle men handling news print jobbers
and sales agents. The distinction between the two is that the jobber
usually buys and resells, while the sales agent chiefly sells on com-
mission. The three largest sales agents on the North American con-
tinent are the George H. Mead Co., Canadian Export Paper Co.,
and H. G. Craig & Co. Each of these concerns represents several
mills, and together they handle several hundred thousand tons of
news-print paper annually. Their sales are largely to the daily
papers and jobbing trade. There are several other sales agents
which handle the output of a particular mill, such as W. H. Parsons
& Co., which sells for the Pejepscot Paper Co., both the manufac-
turing and the selling company being controlled by the same interests.
The jobber handles many grades of paper and often does a com-
mission business as well as buying and reselling on his own account.
The commission business is usually for sales of news-print and
book paper on contracts with publishers. When such contracts are
made the jobber covers them by making similar contracts, either
direct or through selling agents, with the manufacturer, who makes
shipments direct to the publisher.
Almost every city of any importance has one or more jobbers or
wholesale paper houses which carry various kinds of paper. Often
such a house makes a specialty of some particular grade, such as
high-grade printing paper, bond paper, writing paper, kraft or
wrapping paper, building paper, paper bags, twine : etc. While
1 For details Bee Chap. VII, p. 130.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 43
practically all the jobbers handling printing paper handle some
news print, very few make a specialty of it. The reason given by
a number of jobbers is that there is little or no profit in it, and
they only carry it, as a grocer carries sugar, to attract trade for
other kinds of paper. A few of the very large jobbers, however,
do a considerable business in news print, both in rolls and sheets.
Ten of them perhaps handle more than 75 per cent of all the news
print sold by jobbers. None of these depend on a single mill for
their supply of news, although several have allotments of a certain
portion of the output of a particular mill.
A considerable proportion of the sales of news print by jobbers
is for miscellaneous purposes, many of them selling very little, if
any, to publishers. The jobbers making a specialty of news print
in addition to their contract business handle large quantities of
both roll and sheet news on current transactions. Part of this
business passes through the jobbers' warehouses, especially purchases
in ton lots or less. Carload shipments are usually made direct
from the mill. Lots from a ton up to a carload may be shipped
either direct from the mill or from the jobbers' warehouses.
The principal advantage a publisher has in buying his require-
ments of news print through a jobber instead of direct from the
manufacturer is in the matter of service. The jobber normally
carries a stock of roll and sheet news, and, being more conveniently
located with respect to shipping facilities than the manufacturer,
can tide the publisher over in case of a sudden shortage due to such
causes as failure of a car to arrive promptly, freight embargo or
congestion, strikes, fires, etc. This is especially true of publishers
not located in the large cities where the manufacturers keep stocks.
Another advantage is in the matter of extension of credits. A cus-
tomer with a good credit standing can usually secure from the jobber
extensions of credit, especially if he is an old customer, whereas
purchases direct from the manufacturer are usually cash or net 30
days. A third advantage for less-than-carload lots is the saving in
freight. The jobber pays the carload rates for the long haul on
his warehouse stock and the less-than-carload rate is charged only
for the short haul.
Section 7. Imports and exports of news-print paper.
IMPORTS. In 1901 the United States imported less than a thousand
dollars worth of news print. In the fiscal year 1906 such imports
amounted to only $64,382. Since that year the increase has been
rapid and uninterrupted. In the fiscal year 1910 the quantity im-
44
REPORT ON NEWS-PRINT PAPER INDUSTRY.
ported was twenty-five times what it had been in 1906. 1 In the
calendar year 1916 the output of domestic mills supplied only about
70 per cent of the total consumption, practically all the remainder
being imported from Canada.
The steadily increasing dependence of the United States on Canada
for supplies of news print is shown by the following table :
TABLE 4. IMPORTS INTO THE UNITED STATES OF PRINTING PAPER VALUED AT NOT
ABOVE 2.5 CENTS! PER POUND, 1911-1916.
-
Canada.
Total
Quantity.
Value.'
Quantity.
Value.'
Fiscal year ending June 30
1911 .
Tons.
53, 118
55,563
146, 733
274, 842
329,314
438, 212
$1,968,385
2,101,023
5, 646, 289
10,634,926
12, 742, 743
16, 646, 891
Tons.
54,022
56,854
147,479
278,071
332, 782
438,746
$2,010,502
2,155,501
5, 681, 109
10,765,108
12,883,452
16,670,604
1912
1913
1914
1915 .
1916
Six months ending
June 30, 1915. .
165,644
201, 276
6,418,291
7,657,843
166,842
201,567
6, 467, 864
7,670,787
Dec. 31, 1915
Twelve months 1915.
366,920
14,076,134
368,409
14,138,651
Six months ending-
June 30, 1916
236,935
231,017
8,989,048
9,525,109
237, 179
231,051
8,999,817
9,527,931
Dec. 31, 1916
Twelve months, 1916
467, 952
18,514,157
468, 230
18,527,748
Monthly:
July,1916
40,106
40,806
36,360
38,562
38,737
36,446
1,534,795
i,r>J5,oio
1,491,007
1, 614, 178
1, 655, 815
1, 604, 304
40,106
40,806
36,360
38,562
38, 737
36,480
1,534,795
1,625,010
1,491,007
1, 614, 178
1, 655, 815
1,607,126
August, 1916
September, 1916
October, 1916
November 1916
December, 1916
i Since Sept. 8, 1916, 5 cents per pound.
* These figures do not represent accurately the cost of this news print to the American publisher as mosf
of the paper is entered at an officially established vnluat'on of >38 per ton.
Fiscal year imports increased from 54,022 tons in 1911 to 438,746
tons in 1916. Since 1912 the annual increase has not fallen below
50,000 tons, and in two years it has exceeded 100,000 tons. In the
fiscal year 1916 these imports were over eight times as large as in
1911. They increased from 368,409 tons in the calendar year 1915
to 468,230 tons in 1916.
1 Import statistics never have carried a news-print classification, and the classification
by value, used here, was shown only under "Imports for consumption" prior to 1911.
Since that date It Is also shown in the regular import returns.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 45
Canada's rapid progress as a factor in the situation is illustrated
by the increase in the proportion of the total supply of the United
States imported from that country. Ten years ago Canada fur-
nished but a fraction of 1 per cent of the news print used in the
United States; in 1909, less than-4 per cent; in 1916, about 30 per
cent. The imports from Canada amounted to about 75 per cent
of the total Canadian production in the calendar year 1915 and
about 78 per cent in 1916. In the latter year Canada's over-sea
exports amounted to about 53,000 tons, or 9 per cent of the total
output, leaving about 81,800 tons or 13 per cent for home consump-
tion.
A very large part of the imports from Canada come in over the
northern border, but since 1913 entries at Pacific ports have usually
run from one to one and a half million dollars annually. These
figures, of course, take no account of the exchange arrangement be-
tween a United States and Canadian company referred to on page 47
below.
IMPORT DUTIES. For 124 years prior to 1913 duties were imposed
upon the importation of news-print paper into the United States.
The tariff law passed in 1909 reduced the duty to three-sixteenths
of a cent per pound, equivalent to $3.75 a ton, upon news print
valued at not above 2J cents per pound, and the Canadian reciprocity
law passed in 1911 removed the duty entirely on imports of news-
print paper and pulp from Canada, except where the Canadian Gov-
ernment imposed an export duty. The tariff act of 1913 put news-
print paper from all countries valued at not above 2 cents per pound
upon the free list. If valued at above 2-| cents per pound a duty of 12
per cent was imposed. About 60 per cent of the Canadian paper
came in free in 1912. In 1913 over $1,000,000 worth of the Canadian
paper was still paying duty, but since October 3, 1913, no duty has
been paid on printing paper valued at not over 2J cents per pound
in the country whence exported. The rise in price in 1916 led
to the enactment of a provision in the revenue law approved Septem-
ber 8, 1916, raising the minimum of 2J cents per pound to 5 cents.
This was done in anticipation of the market price in Canada going
above 2 cents, which would cause the 12 per cent duty to be imposed
upon imports into this country. For further details see Exhibits
3 and 4.
EXPORTS. Prior to 1911 export figures were not shown separately
in our foreign-trade statistics. Since 1911 'they have run as Table 5
indicates:
46 EEPORT ON NEWS-FEINT PAPEK INDUSTRY.
TABLE 5. EXPORTS OF NEWS-PRINT PAPER FROM THE UNITED STATES, 1911-1916.
Periods.
Quantity.
Total
value.
Value per
ton.
Fiscal year ending June 30
1911
Tons.
49 755
2 434 964
548 92
1912
51 787
2 501 529
48 30
1913 . .
50 213
2 450 520
48 80
1914
44 483
2 177 483
48 94
1915 .
62 841
3 079 137
48 98
1916
63 034
3 119 354
49
6 months ending-
June 30, 1915
25 752
1 307 732
50 78
Dec. 31, 1915
29 409
1,399 894
47.60
12 months, 1915
55 161
2 707 626
49.09
6 months ending-
Jim P. so iflifi
34 212
1 715 917
50 16
Dec. 31, 1916
42 115
2 378 858
56.48
12 months, 1916 . .
76 327
4 094 775
53.64
Months :
July, 1916
7 454
422 486
August, 1916 . .
11 636
599 354
51 ~>1
September, 1916
6 597
370 704
56. 19
October, 1916
4 941
316 061
63 97
November, 1916
:, i.is
:m 1X3
55. 39
December 1916
5 870
(il 17
The smallest quantity exported during the last six fiscal years was
44,483 tons in 1914 immediately preceding the outbreak of the Euro-
pean war. In the calendar year 1916 exports had increased to 76.I-W7
tons, which was 5.6 per cent of the domestic production for the same
period.
The increase in exports in 1916 was in considerable degree due to
shipments to various countries such as France, Portugal, Greece,
China, etc., which prior to the year 1916 imported little or no news
print from this country.
The only domestic manufacturer that has developed an export
trade of considerable importance is the International Paper Co. That
company supplies foreign publishers under contracts similar to those
used in the domestic trade. Aside from the International's business,
news print exports are apparently made up of odd lots handled by
trading companies. That there was a considerable increase in this
odd lot business during 1916 is indicated by the fact that the Inter-
national Paper Co.'s proportion of total exports fell from 85.6 per
cent in the first half of 1915 to 61 per cent in the first half of 1916.
Prior to 1915, so far as information is available, that company's pro-
portion of the total had never fallen below 75 per cent.
GENERAL DESCRIPTION OF NEWS-PRINT PAPER INDUSTRY. 47
The records of the Bureau of Foreign and Domestic Commerce
show a considerable variation in prices on news-print paper ex-
ported during a given month. For example, shipments to Australia
in August, 1916, varied from less than 2 to over 5 cents per pound.
The low price which was on shipments from Portland, Oreg., was
due to an exchange of paper between a Canadian and a United
States company, the latter exporting for the former, in exchange
for Canadian paper delivered in other Pacific coast ports. This
arrangement was made because the Canadian company could not
obtain shipping facilities in Vancouver or Seattle. Export figures
for later months in the year indicated that this exchange arrange-
ment was still in force. These shipments probably amounted to over
5,000 tons during 1916.
CHAPTER HI.
PRICES OF NEWS-PEINT PAPEE.
Section 1. Introduction.
The great bulk of the news-print paper output on the North
American Continent is bought by publishers of the larger dailies on
contracts which provide for the delivery of a certain tonnage at a
fixed price. The contracts usually run for one year, but on the
Pacific coast the prevailing term is five years. These larger pub-
lishers use roll paper, which is shipped to them in carload lots
directly from the mill, though frequently purchased from a jobber
or selling agent.
The large number of the smaller dailies, weeklies, and semiweeklies,
which depend upon the open market for their supplies of paper, use
a relatively small part of the news-print output. Most of these
publishers use sheet paper, which is purchased in less than carload
lots from jobbers.
The detailed price data presented herein show the open-market
prices paid by the smaller publishers and the contract prices paid
by the larger publishers in 1916 and prior years. To show what
effect the increase in prices to publishers which occurred in 1916 had
on the receipts of news-print manufacturers, the average receipts
per ton f. o. b. mill have also been computed for mills in different
years.
Price statistics were obtained from the original contracts on file in
the offices of the various paper mills and jobbers visited by agents of
the Commission, from the sales records of these companies, and from
data furnished by newspaper publishers in response to schedules
sent them by the Commission.
Prices paid by different publishers vary widely during the same
period. These differences depend partly upon distance from mills,
method of purchase, size of purchase, quality of the paper, and
credit standing of the purchaser.
The chief cause of the variation in prices between different sec-
tions of the country is the wide range in freight rates due to the
localization of the news-print industry in the spruce timber regions
of northern United States and in Canada. The relatively high
48
PRICES OF NEWS-PRI-NT PAPER. 49
freight rate on news print in comparison with its value at the
mill makes this an important factor. As compared with freight rates
of 12 to 15 cents per 100 pounds on carload shipments to New York
City, for example, the rates on similar shipments to certain cities of
the Southwest are more than $1, representing at the prevailing
market price during the year 1915 approximately 30 per cent of the
total cost to the purchaser. The cost to the publisher of the East,
the North, and the Pacific Northwest was accordingly 15 to 25 per
cent lower than the cost to purchasers in the extreme South and
Southwest.
Variations in prices paid by different publishers in the same
locality are due to the method of purchase, the size of purchase, and
the quality of the paper. Contract purchases ordinarily average a
lower price than market purchases, and transactions involving large
quantities a lower price than those involving small quantities. Small
purchases are made through jobbers, as a rule, and must bear middle-
men's profits and commissions. Instances have been noted where
paper has passed through as many as three middlemen's hands before
reaching the publisher.
Even when the quantities of paper purchased are the same and
the publishers are in the same locality there is a variation in prices,
due to the fact that some of the mills are able to get a higher price
than others on account of the quality of their paper, greater ability to
deliver on their contracts, etc.
The price statistics have been assembled as far as possible in a
manner to bring out the effect of the various factors which govern
the price of news print in different localities and among different
classes of purchasers. This has involved a separation of contract
prices from market or current prices, and the grouping of the data
by quantity sold, and by localities having the same general level of
freight rates.
In order to facilitate a comparison by localities the country has
been divided into six groups of States, as follows :
(1) Eastern. This group includes the New England States and
the States of New York and New Jersey, Delaware, Pennsylvania,
Maryland and Virginia. The news-print paper consumed in these
States is a product of the mills of the eastern United States and
Canada. Freight charges on paper shipped in carload lots from
Canada average about 20 cents per 100 pounds to localities north of
the Potomac Kiver as compared with about 30 cents to Virginia. In
the case of shipments from domestic mills the freight rate on carload
lots is about 14 cents to New York City as against about 17 cents
to localities in Pennsylvania and about 20 cents to points in Virginia.
88569 17 4
50 REPORT ON NEWS-PRINT PAPER INDUSTRY.
(2) Middle Western. This group includes the States of West
Virginia, Ohio, Indiana, Illinois, and Kentucky. News-print paper
used in this territory is obtained in some cases from centers of pro-
duction in the eastern United States and Canada, but to a large
extent is the product of the paper mills in the States bordering on
the Great Lakes and the adjoining Canadian Province. Within this
group freight rates on carload lots vary from about 10 to 20 cents
to points in Ohio and northern Illinois and Indiana, with an average
of about 20 cents to points in West Virginia and Kentucky.
(3) Southern. This group includes the territory south of Vir-
ginia and Kentucky and east of the Mississippi River. The news
print consumed in this territory is largely the product of the paper
mills of New England and the States bordering on the Great Lakes,
and, in the case of the smaller papers, is usually purchased from
jobbers in the South and Middle West. The freight rates per 100
pounds on news print shipped in carload quantities to cities within
this group range from a minimum of about 26 cents to a maximum
of about 45 cents.
(4) North Central. This group includes the States of Michigan,
Wisconsin, and Minnesota, each of which contains one or more news-
print mills. The freight rate on paper consumed within this group
is relatively low, averaging about 13 cents per 100 pounds in the
case of carload shipments from domestic mills. On shipments from
Canadian mills the freight rates average about 18 cents.
(5) Western. This group includes the territory between the Mis-
sissippi River and the States of the Pacific coast, with the exception
of Minnesota. News-print paper sold in this territory is drawn
from as far east as the Province of Quebec, Canada, and as far west
as British Columbia. On account of the distance from the centers
of production, the price of paper in this territory is relatively high.
The freight rates on carload shipments range from about 15 cents on
deliveries in Iowa to $1.07 on shipments to localities near the south-
western border of the United States.
(6) Pacific coast. The States of California, Oregon, and Wash-
ington are included in this group. Most of the important daily
papers in these States obtain news-print paper under contracts with
mills in the Pacific Northwest. The newspapers of smaller circu-
lation purchase paper, as a rule, through jobbers in Seattle, Port-
land, Los Angeles, and San Francisco. Contract prices in this group
show a wide variation. The range in freight charges on carload
shipments is from a rate of about 7.5 cents in Oregon to a .rate of
about 62.5 cents to southern California.
PRICES OF NEWS-PRINT PAPER. 51
Section 2. Open-market prices.
There was a large increase in prices paid by publishers purchasing
their paper on current orders as needed during 1916. This increase
was much greater than for contract purchases, which are considered
later. Only a small proportion of the total sales of news-print paper,
probably not more than 10 per cent, is sold on current orders. Under
ordinary conditions most of this is sheet paper which is bought in
small quantities by country weeklies, while some of it is roll paper
bought by publishers of small dailies whose requirements do not
amount to more than a car or two a year. During 1916, however,
considerable quantities of roll paper were purchased in the open
market by publishers of the larger dailies whose contracts did not
cover their entire requirements on account of increased consumption,
or who were unable to renew their contracts.
The open-market prices of roll paper in carload lots or over in
1915 were generally less than $2.35 per 100 pounds f . o. b. destination,
while during the third quarter of 1916 the minimum prices in prac-
tically all the States for which prices were tabulated were more than
$3, and by December, 1916, the price had advanced to more than $5
f . o. b. mill.
Open-market prices for sheet news showed an even greater increase
in 1916. For current orders of from 1 to 17 tons, inclusive, the
maximum prices in the third quarter of 1916 were in many cases
higher by $2 to $3 per 100 pounds than the maximum prices in 1915,
while in December, 1916, the prices were sometimes $4 per 100 pounds
higher than in 1915.
RANGE or OPEN-MARKET PRICES or ROLL NEWS. Table 6 below
shows the range in prices paid by publishers on market purchases
of not less than one car, or 18 tons of news-print paper in rolls, for
the year 1915 and for each of the first three quarters of 1916. Ow-
ing to lack of time it was impossible for the Commission to obtain
complete data for the third quarter of 1916 from all of the com-
panies represented in the tabulation for the earlier periods. The
figures for this quarter should therefore be accepted with caution.
Information received from publishers shows that sales were made in
a number of instances during the third quarter of 1916 at materially
higher prices than are shown in the table.
52
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 6. RANGE OF OPEN-MARKET PRICES TO PUBLISHERS ON PURCHASES OF 18
TONS OR OVER, OF NEWS-PRINT PAPER IN ROLLS, BY STATES, 1915-1916.
(Delivered f. o. b. destination.)
Group and State.
Date of order and range of prices per 100 pounds.
1915
1916
First quar-
ter.
Second quar-
ter.
Third quar-
ter.'
Eastern group:
Massachusetts
$2.10-$2.35
$2.10-12.35
$3.21-13.91
3.41-3.51
2.75-3.55
Rhode Island and Connecticut . .
New York
1.98- 2.61
2.05- 2.35
2.00-2.25
2. 02- 2. 15
1.92- 2.15
2.05- 2.25
1.94- 2.41
2.04- 2.18
1.95- 2.15
2. 10- 2. 21
2.32
2. 10- 2. 80
2. 20- 2. 50
2.00-2.35
2.15- 2.35
1.92- 2.39
2.00- 2.44
2 00 2 50
$2.55-$3.50
2.41
2.20-3.50
2.30-3.50
2.05-3.37
2. 02- 3. 50
3 14 4 00
New Jersey
Pennsylvania
2. 23- 4. 25
3.75
Middle Western group;
West Virginia
Ohio
Indiana
3. 50- 3. 80
3. 14- 4. 50
3.27-3.49
4.83-5.00
Illinois
Kentucky . . .
2.13- 2.49
2.11- 2.28
2.15- 2.49
3.50- 4.00
2.23-3.75
2.50-3.49
4.02
2.25- 4.20
3.60
North Central group:
Michigan, Wisconsin, and Minncsol a
Western group:
Iowa
South Dakota
Nebraska and Kansas . .
2.33- 2.35
2.75
4. 06- 5. 36
Missouri and Arkansas
2. 00- 2. 52
1 Prices for the third quarter are not complete, especially for September.
Comparing the year 1915 with the third quarter of 1916, the great-
est increases in prices, as shown by the ranges in the table, were
as follows: Michigan, Wisconsin, and Minnesota, from a range of
$1.95-$2.15 to $4r.83-$5 per 100 pounds; Indiana, from a range of
$2.05-$2.25 to a range of $3.50-$3.80 per 100 pounds; Massachusetts,
from a range of $2.10-$2.35 to a range of $3.21-$3.91 ; Kentucky,
from a range of $2.04-$2.18 to a range of $3.27-$3.49; and Pennsyl-
vania, from a range of $2-$2.25 to a range of $2.23-$4.25.
During the last quarter of 1916 open-market prices continued to
advance. In December, 1916, roll news frequently ranged from $5
to $6 per 100 pounds f. o. b. mill as compared with a range of $1.92
to $2.61 per 100 pounds f . o. b. destination in 1915.
KANGE OF OPEN-MARKET PRICES OF SHEET NEWS. The price of news-
print paper in sheets is influenced by a number of factors which tend
to increase the cost to the consumer above the price level of roll paper.
The cost of manufacture of paper in sheets is somewhat greater than
in rolls owing to the additional labor involved in its preparation for
market. The f. o. b. mill price, as a rule, is from 10 cents to 20 cents
more per 100 pounds for sheet paper than for rolls.
PRICES OF NEWS-PRINT PAPER.
53
Paper finished in sheets usually reaches the consumer through job-
bers, and is delivered in less-than-carload quantities to a much
greater extent than roll paper. Freight and jobbers' profits are ac-
cordingly higher as a whole on sheet paper than on roll paper.
Table 7 below shows the course of market prices paid by publishers
for sheet news in quantities varying from 1 to 17 tons, inclusive, for
the year 1915 and for each of the first three quarters of 1916. The
figures given for the third quarter of 1916 represent only a small
percentage of the total sales and are not fully representative of price
fluctuations during that period.
TABLE 7. RANGE OF OPEN-MARKET PRICES TO PUBLISHERS ON PURCHASES OF 1 TO
17 TONS, INCLUSIVE, OF NEWS-PRINT PAPER IN SHEETS, BY STATES, 1915-1916.
IDeliveries f . o. b. destination.]
Group and State.
Date of order and range of prices per 100 pounds.
1915
1916
First
quarter.
Second
quarter.
Third
quarter. 1
Eastern group:
Maine and New Hampshire
$2. 40-$2. 75
2. 18- 3. 50
2. 08- 3. 00
2.20- 3.30
2.15- 3.00
2. 35- 2. 75
2.10-2.60
2. 30- 2. 70
2. 15- 2. 80
2. 35- 3. 10
2.20-2.95
2.05-3.00
2. 10- 2. 85
2. 30- 2. 75
2. 35- 2. 65
2.30-3.15
2. 40- 2. 75
2.60-2.90
2. 40- 2. 50
3.50-3.75
2. 30- 2. 65
2.20-3.00
2. 30- 2. 80
2. 40- 2. 93
2.65-2.86
2. 52- 2. 95
2.50-3.10
$2. 40-$2. 75
2. 45- 3. 75
2. 20- 3. 05
2.35-3.60
2.45- 4.50
2. 75- 3. 41
2.35-2.85
2. 45- 3. 25
2.26-3.50
2.60
2.34- 3.50
2.25-3.00
2.40-3.00
2. 40- 3. 00
2.50- 3.25
2.50-3.28
2.40- 3.00
2.25-3.75
2.55-2.85
4.00
2.50-4.00
2.37- 3.20
2. 17- 4. 15
2. 50- 3. 50
2. 70- 3. 25
2.18
2.50-4.15
$2.75-13.50
3. 00- 4. 50
2.35- 5.00
2. 35- 4. 10
2.75- 4.50
3.21
2.75-4.95
3.00-4.15
2.60- 4.00
2.60-4.50
2. 63- 5. 00
2. 53- 4. 65
2. 75- 4. 45
2.68-4.50
3. 25- 4. 50
2.55-4.00
2.95-4.25
3.75-4.40
2.70- 4.63
4. 00- 4. 50
3. 00- 4. 00
2. 90- 4. 50
3.32-4.65
3. 28- 4. 78
3. 26- 4. 51
4.00- 4.95
3.15-5.05
$3.40-$4.65
3. 62- 6. 00
3.39-5.50
3. 66- 5. 25
3.66- 6.00
4.50
4.00-5.60
4. 00-5.M
3.25-5.50
4.50- 5.00
4.22-6.09
3.05-4.75
5.50- 6.00
4. 00- 5. 75
3.50
3. 84- 4. 20
3.90- 4.50
4.70
5.00
Massachusetts and Connecticut
New York
New Jersey .
Ppim s y 1 v an i a
Delaware and Maryland
Middle Western group:
West Virginia ....
Ohio
Indiana . . .
Kentucky
Illinois
North Central group:
Michigan
Wisconsin
Minnesota
Southern group:
North Carolina . .
South Carolina
Georgia
Tennessee
Alabama
Florida
Mississippi
4. 00- 4. 50
4.70-6.00
4.43- 6.07
5.00- 5.28
Western group:
Iowa
Missouri
North Dakota
South Dakota
Nebraska
3. 83- 6. 75
4. 25- 6. 25
Kansas
Prices for the third quarter of 1916 are not complete, ^specially for September.
54
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 7. RANGE OF OPEN-MARKET PRICES TO PUBLISHERS ON PURCHASES OF 1 TO
17 TONS, INCLUSIVE OF NEWS-PRINT PAPER IN SHEETS, ETC. Continued.
Date of or
der and range
jf prices per 1C
K) pounds.
Group and State.
1916
1915
First
quarter.
Second
quarter.
Third
quarter.
Western group continued.
Idaho
$3 60
$3 50
$4 75-$5 00
Oklahoma ....
$2.95- 3 10
$2.95- 3.55
$3.60-$4 50
4.50- 5.50
Montana .
2 50- 3 81
3 15- 3 91
3 91 5 75
4 60- 6 25
Texas
2. 55- 3. 15
3 00- 3.50
3 25- 5. 00
5.00- 7.00
Utah
3 75
3 75
4 50- 5 29
New Mexico and Arizona ....
3. 25- 4. 10
3. 25- 3. 75
3 25-4.65
5. 00- 5. 75
Pacific coast group:
Washington.
3.00- 4.14
3 15- 4.50
3.50- 4.93
4. 00- 6. 14
2.70- 4.04
3. 10- 4. 18
3.64- 4.85
4. 50- 5. 58
California . .
2 60- 4 50
2 84- 4 50
3 25- 6 50
3.25- 6 00
This table shows that there was a rapid increase in prices on orders
of from 1 to 17 tons of news-print paper in sheets during 1916. In
fact, the minimum prices were higher in all but two States Washing-
ton and California during the third quarter of 1916 than the maxi-
mum prices of 1915. In many cases they were more than $1 per 100
pounds higher. The maximum prices in the third quarter of 1916
were in many cases higher by $2 to $3 or more per 100 pounds than
the maximum prices in 1915.
The greatest increase in the general level of prices, as indicated by
the ranges, was in the western group, which includes the States west
of the Mississippi River, except the Pacific coast group, while the
smallest increase was found in the latter group.
In the last quarter of 1916 open-market prices on sheet news con-
tinued to advance. In December, 1916, prices for less-than-carload
lots often ranged from $6.50 to $7.50 per 100 pounds, as compared with
$2.20 to $4.20 at the beginning of the year. In some cases sheet paper
in less than ton lots sold for $8 or more per 100 pounds.
During the latter part of February, 1917, the open-market price
on sheet news in ton lots decreased to a range of from about $5 to $7
per 100 pounds. For jobbers' sales prices of roll and sheet news see
pages 78 and 79.
PRICES OP READY-PRINT SHEETS. More than 90 per cent of the ready
print used in the United States is furnished by the Western News-
paper Union. The price of ready print varies according to the size of
sheet and quantity purchased and whether with or without advertis-
ing. It is issued in folios (two pages printed and two pages blank)
and in quartos (four pages printed and four pages blank). The six-
PKICES OF NEWS-PRINT PAPER.
55
column quarto, size 30J by 44 50-pound paper, is the one most used.
The prices of the Western Newspaper Union for this size of ready
print from August 1, 1913, to August 1, 1916, inclusive, are shown in
the table below :
TABLE 8. PRICES OF THE WESTERN NEWSPAPER UNION FOR READY-PRINT SHEETS
PER QUIRE OF SIX-COLUMN QUARTO, 30J BY 44 50-POUND PAPER, AUG. 1, 1913, TO
AUG. 1, 1916, INCLUSIVE.
[Eight pages, four printed and four blank.]
Quantity.
Aug. 1, 1913, to
July 31, 1916.
Effective from
Aug. 1, 1916.
With ad-
vertising.
Without
adver-
tising.
With ad-
vertising.
Without
adver-
tising.
Under 20 quires
$0.14
.13
.12
.11
.10
.09
10.22
.21
.20
.19
.18
.17
b
$0.17
.16
.15
.14
.13
.12
$0.25
.24
.23
.22
.21
.20
20 to 29 quires .
30 to 39 quires
40 to 49 quires
50 to 59 quires
fiO qviiras an<J over
These prices are f. o. b. the nearest branch office of the Western
Newspaper Union. About 97 per cent of the papers supplied by this
company use ready print with advertising already printed on it.
There was no change in prices between August 1, 1913, and July
31, 1916, while the increase, effective August 1, 1916, was 3 cents per
quire. On paper with advertising this amounted to an increase of
from 21.4 to 33.3 per cent, according to the quantity ordered.
A circular letter to ready-print customers guaranteed that the
rates effective August 1, 1916, would not be increased during the
next 12 months, and that when market conditions become normal and
former paper prices are restored the rates will be reduced accord-
ingly.
Section 3. Contract prices.
There was a slight decrease in the prices at which contracts for
news-print paper were made during the period from 1912 to 1915,
inclusive. There was a continuous increase, however, in the prices
on contracts made during 1916. On most of the tonnage contracted
for during the latter part of 1916 this increase was about 60 per
cent. In some cases the increase was more than 100 per cent.
About 90 per cent of the total shipments of news-print paper is
sold under contract. Most of this is roll paper and is used by daily
papers. Most of the daily papers in the larger cities use more than
1,000 tons of paper per year. In some cases they use as high as
30,000 tons or over. On the other hand, the daily papers in the
smaller cities ordinarily use less than 1,000 tons per year, and in
many cases 100 tons or less.
56 REPORT ON NEWS-PRINT PAPER INDUSTRY.
PROVISIONS OF CONTRACTS. Daily papers obtain news print as a rule
under contracts direct with manufacturers or through large whole-
sale companies, which provide for the delivery to the purchaser of a
certain tonnage of paper at the price, on the terms, and for the period
stipulated in the agreement. 1
Three common forms of tonnage specifications existed prior to
1917: (1) provision for the entire supply with an estimate of the
tonnage required; (2) a maximum and minimum tonnage specified;
and (3) a given tonnage specified, with a leeway of from 5 to 10 per
cent. The present standard contracts provide for a fixed tonnage.
In the territory east of the Mississippi River comparatively few of
the existing contracts cover a period of more than one year, and in
some recent cases they are limited to shorter periods, while on the
Pacific coast contracts with the larger dailies usually cover a period
of five years. Where contracts were made shortly after the inception
of the upward trend in prices, they were in some instances limited
to a period of not more than six months. Most of the contracts made
to begin during the last half of 1916 were drawn to expire with the
end of the calendar year. Some of the contracts which expired
during that period were not renewed, the publishers being placed on
a current market basis.
The prices paid by publishers for news-print paper in some cases
include the cost of delivery at the city of publication, and in others
are f. o. b. mill, transportation charges being collected from the
customer by the transportation agencies. In contracts between news-
print manufacturers and the large metropolitan dailies the price,
until recent months, has usually been for delivery at the pressroom
of the publisher, the payment of both freight and drayage charges
being assumed by the manufacturer. As a measure of protection to
the purchaser in the case of an interruption of traffic, such contracts
have usually contained a stipulation requiring the manufacturer to
keep in storage at all times in the city at which the paper is delivered
a sufficient quantity to meet the requirements of the publisher for a
specified period, usually not less than 10 days to 2 weeks' require-
ments.
In connection with the marked advance in the price of news-print
paper in 1916, a new policy was announced by many news-print
paper manufacturers in both the United States and Canada, namely,
the discontinuance of sales for delivery at the pressroom or railroad
delivery station and a substitution of delivery to the purchaser at
the mill. This policy was reflected in the sales records of a number
of the large eastern mills for the months of July and August, 1916,
and has been adopted in almost all of the contracts made since then.
By selling f. o. b. mill, instead of sidewalk or pressroom, the man-
1 See Exhibit 5 for forms of contract.
PRICES OF NEWS-PRINT PAPER. 57
ufacturer is relieved of the necessity of carrying a supply of paper
in storage in various cities in which his customers are located, of [
providing cartage facilities for sidewalk delivery, and also of the
trouble of collecting damages from the railroads for injury to the
paper in transit. Any increase in the freight rates .and cartage
charges must now be borne by the publisher.
In the territory north of the Potomac and Ohio Rivers and east
of the Missouri River the freight rates to most points range between
7.5 and 25 cents per 100 pounds with an average of about 15 cents.
South of the Potomac and Ohio Rivers and east of the Mississippi
River the freight rates range between 20 and 45 cents per 100 pounds.
In the Southwest the rates range from 40 cents to over $1 per 100
pounds.
In 1916 the cartage charges in various cities ranged from 2.5 cents
to 5 cents per 100 pounds, and storage charges, in cases where the
paper was stored, were about 2.5 cents additional. Cartage and
storage together generally amounted to about 5 cents per 100 pounds,
although in some cases they were as high as 8 or 9 cents per 100
pounds. However, the individual publishers are now paying higher
cartage and storage charges than were paid by the manufacturers in
1916 for deliveries to the same publishers.
All new taxes that may be levied upon news-print paper are also
to be paid by the publisher. The contract form of one large manu-
facturing company contains the following clause on this point:
Any new tax of any nature which may hereafter be levied by
any Government, State, or municipality increasing the cost of
all or any portion of the said paper or any of the materials used
in the manufacture thereof shall be added to the said price to be
paid by the purchaser.
No leeway is allowed in the tonnage. The publisher must order a
definite tonnage to be taken during the contract period in equal
monthly installments, although the consumption varies at different
seasons of the year.
It is clear that these changes in the terms of contracts must increase
the actual cost of the paper to publishers. A traffic specialist em-
ployed by a great manufacturing corporation is in position to reduce
actual costs of transportation and minimize the chances of damage
in transit. A single stock in any one locality from which a number
of publishers draw their supplies does not need to be nearly so large
as the aggregate of the stocks that are necessary if each publisher
stores his own reserves.
These and otheFsimilar additions to the burden of the publishers
under the present form of contract together constitute an economic o
loss to the country as a whole, which will be found to be very con-
siderable in amount.
58 REPORT ON NEWS-PRINT PAPER INDUSTRY.
RANGE OF PRICES ON CONTRACTS FOR 1,000 TONS OR OVER. In the fol-
lowing table is shown the course of prices from 1912 to 1916 in 32
large cities on contracts involving not less than 1,000 tons of paper.
The figures include the highest and lowest prices on contracts made
in each period for paper delivered in the city of publication, either
at the railroad station or on the sidewalk at the pressroom of the
publisher. In the case of contracts based on delivery at the mill,
destination prices were obtained by adding to the mill price the
freight rate to destination. Where this rate was not shown by the
records of the jobber or manufacturer, rates were obtained from
tariffs filed with the Interstate ' Commerce Commission. The side-
walk prices differ from destination prices by the inclusion in the
former of drayage and storage charges, which range from 2.5 to 5
cents per 100 pounds.
PRICES OF NEWS-PRINT PAPER.
59
<'
; ; ; 1 8 3 S
eq i* 9 5 co tt
-s 'S.
-
2 "
1 1 ,
s II
1 *"
OO <*< CO IO IO IO CO 00
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8 ^3
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H
1
iOiOOCOO4QPOOiOOOO
88S2SSS8
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M.c<f<Ci*444f0ieiM
ol H e4 -Nf4 e4 e4 c4-'-c4
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a
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g4<N0404040404*oio4'<N0404
40404040404040404 c** 04
22122^^555
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00 S
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822383S88 ss
04CJ04040J04040JOJ c4H
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22S8S2J3c5
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4-'
g 2 S^^3S^ as
o| ci NciciciiN NIN
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g <N <N (N W
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04 04 04 04 04 04 04 04
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04 04 04 01
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: : : : : : :
s^
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|oooooc|oooo
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Group and city.
1 j i^^ ;^J jrf j
g >H {H ^ -z; H, - fX j- >
&a*^5f ||5-|
IflSillfiilii
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iiiiji}<u
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60
REPORT ON NEWS-PRINT PAPER INDUSTRY.
oT
w
3
a
3
1
&
^
:^ g g SS3
<N c<i oi cJ N e-i c4 c<i ci
oi pi
>H
A
a
P5
of
3
8
h
3
g
PI
ei
o3 2j
K-5
PAPER IN
)f prices in do!
iO
3
CJI-HC4 C4 C4OJIN C^ r-i O4
EWS-PRINT
i
rt
1
S3
c<5e4c4 c<ic4 NP Neioi
I
11
J5
h
O
ri
w
>
.
signing contn
CO
2
<N IN C^i <N IN CS N CNI C^ c4 <N C^
gjci c4w'<NO*<N N
be w
P OT
000 TONS OR
LF) Continued
Date of
3
" 8 ^ ^ ^ 2
gj C4 <N <N (N
pounds added to
sounds deducted
^ <<
n* 3
1
: I : i : : :
S.3.
TH PUBLISHERS
1912-1916 (FIR
111
r 8
>floo >cooo o'o'o
g^Td'O '.3 -0 -0 -0 -OTJ-O
g '. : a 1 ' ' ' ' ' '
QQ P S H
estimated at 4 cents
estimated at 4 cents
)NTRACTS WI
i Cartage charges
Cartage charges
3
o
^,
^
8
2
A
o
: : : : : : : : : : :
PI
ft
o
H
TABLE 9. RANG
M! a ; d "- I.
S'8a'2fi 0" fc^-^ c
ltllllllff 58) llS
6-la^Ea-S|g^5
$i^lil^ii|lil
fc rs
11^
PRICES OF NEWS-PRINT PAPER. 61
The above table shows that the prices of news-print paper on con-
tracts of 1,000 tons or over decreased slightly from 1912 to 1915.
This was true in most cases for both the lowest and highest prices.
Relatively few contracts were made during the first six months of
1916.
In the first quarter of 1916 the general level of contract prices was
somewhat higher than in 1915, there being few cities in which there
were prices as low as the mmimum prices in 1915, while in a num-
ber of cities there were prices higher than the maximum prices
in 1915.
In the second quarter of 1916 there was a distinct advance over
the maximum prices of 1915, except in a few cities. The most nota-
ble advances in maximum prices were in the following cities:
Chicago, 111., from $2.05 to $2.74, an advance of 69 cents per 100
pounds; Richmond^ Va., from $2.10 to $2.54, an advance of 44 cents;
Kansas City, Mo., from $2.11 to $2.51, an advance of 40 cents; Co-
lumbus, Ohio, from $2.06 to $2.45, an advance of 39 cents; St. Paul,
Minn., from $2.01 to $2.40, an advance of 39 cents; Denver, Colo.,
from $2.49 to $2.83, an advance of 34 cents; Minneapolis, Minn., from
$2.07 to $2.40, an advance of 33 cents; New Orleans, La., from $2.25
to $2.58, an advance of 33 cents; and Toledo, Ohio, from $2.10 to
$2.40, an advance of 30 cents. It will be noted that all these cities
are south of the Potomac or west of the Appalachian Mountains.
There were also advances in maximum prices ranging from 20 to 29
cents per 100 pounds in Cincinnati, Ohio ; Memphis, Tenn. ; Omaha,
Nebr. ; Scranton, Pa. ; Cleveland, Ohio ; Milwaukee, Wis. ; and Louis-
ville, Ky. Scranton, Pa., is the only one of these cities north of the
Potomac and east of the Alleghenies.
In a number of the cities no contracts were signed during the
second quarter of 1916, while in a few others contracts were signed
at about the same level as the 1915 prices. Examples of the latter
are Boston, Mass.; Philadelphia, Pa.; and Birmingham, Ala. The
Boston price was on a contract signed in April, 1916. The Philadel-
phia price was on a contract which : although signed in May, 1916,
was effective as of January 1, 1916.
Only one contract involving 1,000 tons or more of news print was
made in the Pacific coast group in 1916. As prices for the period *")
1912 to 1915 alone would have no material significance, they have not .
been included in the table.
RANGE OF PRICES ON CONTRACTS FOR 100 TO 999 TONS. Table 10 fol-
lowing gives the range in prices on contracts for 100 to 999 tons,
inclusive, of news print in rolls, by States, for the years 1913 to
1915 and for each of the first two quarters of 1916.
62
REPOKT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 10. RANGE OF PRICES ON CONTRACTS WITH PUBLISHERS FOR 100 TO 999
TONS, INCLUSIVE, OF NEWS-PRINT PAPER IN ROLLS, BY STATES, 1913-1916 (FIRST
HALF).
[Deliveries f . o. b. destination.]
Group and State.
Date of signing contract and range of prices per 100 pounds.
1913
1914
1915
1916
January-
March.
April-June.
Eastern group:
New Hampshire and Ver-
mont
$2. 05-12. 35
1.95- 2.31
1.9ft- 2. 35
1.98- 2.30
2.06- 2.20
2.05
2. 00- 2. 35
2.05- 2.32
2.05-2.35
1.95- 2.22
2. 29- 2. 35
2. 10- 2. 50
2. OS- 2.35
2.06- 2.38
2. 20- 2. 28
2.21- 2.48
2. 13- 2. 22
2. 15- 2. 26
2. 35- 2. 45
2. 17- 2. 37
2. 24- 2. 32
2. 15- 2. 52
2. 28- 2. 51
2. 45- 2. 62
2. 41- 2. 82
2. 65- 2. 75
2.93
2. 50- 2. 85
2.70
2.84
$2. 02-12. 25
1.96- 2.35
2.00- 2.41
1.98- 2.30
2.04-2.28
2. 05- 2. 15
1.96- 2.29
2. OS- 2.18
2. 00- 2. 29
1. 95- 2. 22
2.20- 2.47
2. 30- 2. 45
2.20- 2.40
2. 25- 2. 50
2.21- 2.36
2. 25- 2. 35
2. 10- 2. 40
2. 10- 2. 32
2.35
2. 19- 2. 26
2.10- 2.44
2. 15- 2. 54
2. 31- 2. 74
2. 22- 2. 84
2. 53- 2. 75
2. 85- 3. 01
2. 75- 2. 88
2. 54- 2. 70
2. 50- 2. 89
SI. 97-12. 25
1.96- 2.21
1.98- 2.35
1.98- 2.30
2. 06- 2. 26
2.03- 2.19
2. 00- 2. 29
2.02- 2.18
1.99- 2.28
1. 90- 2. 38
2. 18- 2. 45
2. 10- 2. 40
2. 10- 2. 40
2. 10- 2. 37
2.20- 2.31
2.27 2 40
$2.17-$2.30
2. 15- 2. 31
2.10- 2.31
2.05- 2.18
2.28
$2.37
S2. 30- 2. 61
2.09- 3.27
2.08- 3.16
2.34
2.50
2. 25- 2. 84
Massachusetts, Rhode Island,
and Connecticut ,
New York and New Jersey . .
Pennsylvania, Delaware, and
Marvland
Virginia
Middle Western group:
West Virginia
Ohio and Indiana
1.95- 2.38
2.53
2.10- 2.45
2.05- 2.40
2.43- 2.47
2. 33- 2. 34
2.50
Kentucky
Ulinois
2. 06- 3. 50
2. 25- 2. 66
2. 61 3. 01
North Central group:
Michigan and Wisconsin
Southern group:
North Carolina
South Carolina
2.25
2.70
Florida
Alabama
2.40- 2.60
2.37- 2.66
2. 51- 2. 62
2. 70- 2. 80
Western group:
2. 00- 2. 30
2. 10- 2. 30
2. 33- 2. 3S
2.0(1
2.21
2. 10 2 V>
2. 17- 2. 72
2. 30- 3. 00
2.45
Missouri
North Dakota
South Dakota
2.71
2. 54 2. 88
Nebraska
2 14 2 52
2.56
2.38- 2.49
2.50
Oklahoma . .
2. 29- 2. 43
2. 26- 2. 74
2. 53- 2. S3
2.82- 3.17
2.5f
2.45
2. 50- 2. 90
2.6fi
2.67
3. 00- 3. 13
Texas
Montana
New Mexico and Arizona
Utah and Nevada
Pacific coast group:
Washington . .
2. 54
California
2.70
On contracts for 100 tons to 999 tons, inclusive, of news-print
paper there was little movement in the general level of prices be-
tween 1913 and 1915. There was a distinct increase during the first
quarter of 1916, followed by a greater increase during the second
quarter. In fact the minimum prices of the second quarter of 1916
were higher in most cases than the maximum prices of 1915. How-
PRICES OF NEWS-PRINT PAPER. 63
ever, the number of contracts made during the first six months of
1916 was relatively small.
Comparing the range of prices in the second quarter of 1916 with
the range in 1915, the most noticeable increases were as follows: In
New York and New Jersey, grouped together, the range was from
$1.98 to $2.35 in 1915, and from $2.09 to $3.27 in the second quarter
of 1916 ; in Illinois the range was from $1.99 to $2.28 in 1915, and
from $2.06 to $3.50 in the second quarter of 1916; in Pennsylvania,
Delaware, and Maryland, grouped together, the range was from
$1.98 to $2.30 in 1915, and from $2.08 to $3.16 in the second quarter
of 1916; in North Carolina the range was from $2.18 to $2.45 in
1915, and from $2.61 to $3.01 in the second quarter of 1916; in
Michigan and Wisconsin, grouped together, from $1.90 to $2.38 in
1915, and from $2.25 to $2.66 in the second quarter of 1916 ; in Ohio
and Indiana, grouped together, from $2 to $2.29 in 1915, and from
$2.25 to $2.84 in the second quarter of 1916 ; in Nebraska from $2.10
to $2.42 in 1915, and from $2.54 to $2.88 in the second quarter of
1916; in Massachusetts, Rhode Island, and Connecticut, grouped
together, from $1.96 to $2.21 in 1915, and from $2.30 to $2.61 in the
second quarter of 1916; in Montana from $2.53 to $2.83 in 1915, and
from $3 to $3.13 in the second quarter of 1916; in Iowa from $2 to
$2.30 in 1915, and from $2.37 to $2.66 in the second quarter of 1916 ;
and in Missouri from $2.10 to $2.30 in 1915, and from $2.51 to $2.62
in the second quarter of 1916.
RANGE OF PRICES ON CONTRACTS FOR LESS THAN 100 TONS. Contract
prices for roll paper for less than 100 tons in carload lots ranged
at a somewhat higher level than the prices on contracts involving
larger tonnages.
During the period 1913 to 1915, inclusive, there was little change
in the general level of prices on contracts covering such tonnage.
On contracts made during 1 the first quarter of 1916, however, there
was some increase in prices. Very few contracts were made during
the second quarter of 1916, but some of these were at considerable
increases in price. As already stated, a number of small publishers
whose contracts expired during this period could not secure new
contracts, and were compelled to purchase their paper at market
prices.
PRICES ON CONTRACTS COVERING DELIVERIES IN 1917. During the
second half of 1916 contract prices continued to advance. Contracts
to cover the year 1917 were made by domestic and Canadian manu-
facturers at prices ranging from $2.50 to $3.50 per 100 pounds f. o. b.
mill, most of the renewals being above $3. This represented an in-
crease in the minimum of 65 cents and in the maximum of $1.50 per
100 pounds over the prices of 1915, which ranged from about $1.85
to about $2 at the mill.
64
REPORT ON NEWS-PRINT PAPER INDUSTRY.
In some cases contracts were made to cover deliveries in 1917 at
$4.50 f. o. b. mill, an advance of from $2.50 to $2.65 per 100 pounds.
LOW, HIGH, AND AVERAGE PRICES ON CONTRACTS FOR 100 TONS OR
OVER. In order to show whether the major part of the contract ton-
nage was sold at prices approximating the minimum or the maxi-
mum prices in the preceding tables a tabulation has been made show-
ing for certain cities the lowest, highest, and weighted average
prices of all contracts with publishers for 100 tons or more of news-
print paper in rolls during the period 1912-1916. This table is given
below :
TABLE ll.-LOWEST, HIGHEST, AND AVERAGE PRICES ON CONTRACTS WITH PUB-
LISHERS FOR 100 TONS OR OVER OF NEWS-PRINT PAPER IN ROLLS, BY CITIES,
1912-1916 (FIRST HALF).
City.
Date of signing contract and price per 100 pounds, f. o. b. cars or
sidewalk at destination.
1912
1913
1914
Low-
est.
High-
est.
Aver-
age.
Low-
est.
High-
est.
Aver-
age.
Low-
est.
High-
est.
Aver-
age.
P oston Mass '
$2.08
2.00
2.05
2.11
2.09
2.05
2.18
2.18
$2.30
2.25
2.25
2.20
2.25
2.10
2.30
2.25
$2.11
2.13
2.15
2.17
2.20
2.07
2.28
2.21
$2.05
2.00
2.03
2.01
2.05
2.05
2.12
2.18
$2.25
2.25
2.25
2.05
2.25
2.27
2.20
2.33
$2.08
2.11
2.08
2.04
2.13
2.09
2.19
2.26
S2.00
2.00
2.07
2.00
2.03
2.05
2.10
2.25
$2.20
2.20
2.18
2.05
2.15
2.08
2.15
2.28
$2.04
2.09
2.13
2.03
2.13
2. Ofi
2.12
2.27
New York N Y 1
Philadelphia Pa. 1
Columbus Ohio*
Chicago 111 1
Milwaukee, Wis. 3
Kansas City Mo 3
New Orleans La 3
City.
Date of signing contract and price per 100 pounds, f. o. b. cars or
sidewalk at destination Continued.
1915
1916
January-March.
April- June.
Low-
est.
High-
est.
Aver-
age.
Low-
est.
High-
est.
Aver-
age.
Low-
est.
High-
est.
Aver-
age.
Boston Mass '
$2.02
2.00
2.08
2.00
1.98
1.95
2.10
2.21
$2.15
2.20
2.18
2.01
2.19
2.10
2.13
2.25
$2.08
2.09
2.08
2.00
2.03
1.99
2.11
2.22
$2.18
2.00
2.10
2.04
2.14
2.08
$2.18
2.15
2.15
2.04
2.14
2.08
$2.18
2.11
2.13
2.04
2.14
2.08
$2.25
$2.25
$2.25
\p\v York N Y '
Philadelphia Pa. 1
2.08
2.40
2.74
2.30
2.49
2.58
>2.08
2.40
2.78
2.30
2.51
2.58
22.08
2.40
2.75
2.30
2.50
2.58
Columbus Ohio 3
Chicago 111 i
Milwaukee, Wis. 3
Kansas City Mo 3
New Orleans La *
2.40
2.40
2.40
i F. o. b. sidewalk at destination.
Executed on May 9, 1916, but effective as of Jan. 1, 1916.
8 F. o. b. cars at destination.
The table shows that in most years the average prices approxi-
mated more closely to the lowest prices than to the highest. This
was especially true in 1915 and 1916. This results from the fact that
PEICES OF NEWS-PRINT PAPER.
65
contracts for a large tonnage are usually made at lower prices than
those for a smaller tonnage.
There was a slight decrease in average prices in 1915 as compared
with 1912 in all the cities shown, except New Orleans, where there
was an increase of 1 cent per 100 pounds. The average prices in the
first quarter of 1916 increased over the average prices in 1915 in all
of the cities shown, the largest increase being 18 cents per 100 pounds
in New Orleans. In the second quarter of 1916 the increase in the
average prices over 1915 prices was much larger, except for Phila-
delphia. The largest increase was in Chicago, amounting to 72 cents
per 100 pounds.
CONTRACTS IN FORCE SEPTEMBER i, 19 1 6. The preceding tables show
that prices on contracts made during the first quarter of 1916 ad-
vanced to some extent over prices on contracts made prior to January
1, 1916, and that contracts made during the second quarter of 1916
showed still further increases in price.
The number of contracts and the tonnage covered by those that
were made during these periods for an annual supply of 100 tons and
over and which were in force on September 1, 1916, are shown by
Table 12 below. Contracts are shown separately for paper from
mills in the eastern United States district, the Canadian district, and
the north central United States district. The eastern United States
district includes mills in New York and the New England States ; the
Canadian district includes mills in Quebec and Ontario; and the
north central United States district includes mills in Michigan, Wis-
consin, and Minnesota.
Contracts for paper from mills on the Pacific coast are not shown.
It is sufficient for this district to state that nearly all of these contracts
were made prior to September 1, 1915.
TABLE 12. DATES OF SIGNING CONTRACTS WITH PUBLISHERS FOR 100 TONS OR OVER
OF NEWS-PRINT PAPER. IN FORCE ON SEPT. 1. 1916.
Date of signing contract.
Eastern United States (339
contracts). 1
Canada (86 contracts). 2
Number
of con-
tracts.
Annual
tonnage.
Per cent
of
tonnage.
Number
of con-
tracts.
Annual
tonnage.
Per cent
of
tonnage.
Prior to Sept. 1, 1915
49
159
208
58
266
56
17
224,299
237,394
461, 693
104,162
56^55
43,993
18, 221
35.7
37.8
73.5
16.6
900_
7.0
2.9
19
31
50
15
65
17
4
87, 962
50,518
138,480
50,190
188, 670
49, 277
4,045
36.3
20.9
57.2
20.8
78.0
20.3
1.7
Septprnber PftOflTnbp.r 1915
Total, prior to Jan. 1. 1916
'anuary-March, 1916
Total, prior to Apr. 1, 1916
April-June 1916
July-August, 1916
Grand total
628, 069
100.0
241, 992
100.0
i Includes mills in New York and the New England States.
'Includes mills in Quebec and Ontario wit^i exception of the Fork Frances mill of the Minnesota &
Ontario Power Co. in western Ontario.
88569 17 -5
66
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 12. DATES OF SIGNING CONTRACTS WITH PUBLISHERS FOR 100 TONS OR
OVER OF NEWS-PRINT PAPER, IN FORCE ON SEPT. 1, 1916-Continued.
Date of signing contract.
North central United States
(75 contracts). 1
Total (500 contracts).'
Number
of con-
tracts.
Annual
tonnage.
Per cent
of
tonnage.
Number
of con-
tracts.
Annual
tonnage.
Per cent
of
tonnage.
Prior to Sept 1 1915
.26
19
45
12
57
15
3
33,885
24,070
57,955
28,707
78, 662
16,025
840
35.4
25.2
60.6
21.7
82.3
16.8
.9
94
209
303
85
388
88
24
346,146
311,982
658,128
175,059
833, 187
109,295
23,106
35.9
32.3
68.2
18.1
86.3
11.3
2.4
September-December, 1915
Total prior to Jan 1 1916
January-March 1916
Total, prior to Apr. 1, 1916
April-June 1916
July-August, 1916
Grand total
95,527
100.0
965,588
100.0
i Includes mills in the States of Michigan, Wisconsin, and Minnesota, and the Fort Francis mill of the
Minnesota & Ontario Power Co. in western Ontario.
'Covers mills in the United States and Canada, except those on the Pacific coast.
It will be seen that the greater part of the tonnage shown in each
of the districts was under contracts made prior to January 1, 1916,
when prices were low.
In the eastern United States district, 73.5 per cent of the total
tonnage shown was under contracts made prior to January 1, 1916;
16.6 per cent under contracts made during the first quarter of 1916 ;
and 7 per cent on contracts made during the second quarter of 1916.
Corresponding figures for the Canadian district are 57.2 per cent,
20.8 per cent, and 20.3 per cent. For the north central district they
are 60.6 per cent, 21.7 per cent, and 16.8 per cent.
The mills in the Canadian and the north central United States dis-
tricts had under contracts made during the first six months of 1916
a larger proportion of their total tonnage shown than did the mills
in the eastern United States district.
For the three districts combined, 68.2 per cent of the total tonnage
shown was on contracts made prior to January 1, 1916 ; 18.1 per cent
on contracts made during the first quarter of 1916 ; and 11.3 per cent
on contracts made during the second quarter of 1916.
For the same three districts combined, contracts in force on Sep-
tember 1, 1916, covering 56.1 per cent of the total tonnage shown,
expired prior to January 1, 1917, of which 49.5 per cent expired on
December 31, 1916.
So large a proportion of low-priced contracts expiring during the
fall of 1916 indicated that during 1917 renewed contract tonnage
would have to bear a greater proportion of the increase in price, and
that there would not be so great a disparity between prices on ship-
ments of contract and current paper as occurred during the last
half of 1916.
PBICES OF NEWS-PRINT PAPER.
67
Section 4. Average receipts per 100 pounds at mill.
The changes that have occurred since January 1, 1913, in the
average receipts per 100 pounds of manufacturers from the sale of
news-print paper are shown by Table 13 below. The averages in-
clude all sales, both contract and market, and those to jobbers as
well as those to publishers. They also include sales in Canada and
other foreign countries.
The various mills included in the averages have been grouped ac-
cording to location into five districts, designated in the table below
as New England, New York, Canada, north central United States,
and the Pacific coast. The north central United States district in-
cludes, in addition to the news-print mills in Wisconsin and Minne-
sota, a western Ontario mill. The Pacific coast district includes 1
mill in British Columbia in addition to those in the United States.
For the New York and the New England mills approximately
85 per cent of the news print produced during the period covered
by the table was sold under annual contracts. The market fluctua-
tions in the case of these mills as well as those of the Pacific coast
where long-term contracts prevail are less quickly reflected in the
trend of average receipts at the mill than in the case of the north
central United States and the Canadian mills, which had a larger
proportion of transient business, and also a larger proportion of
tonnage under contracts renewed during the first half of 1916.
The average receipts per 100 pounds at the mill were obtained by
dividing the total receipts, less freight, drayage, and discounts, by
the total tonnage shipped in each period.
TABLE 13. AVERAGE RECEIPTS PER 100 POUNDS OF NEWS-PRINT PAPER AT MILL
ON SHIPMENTS, BY DISTRICTS 1913-1916 (FIRST HALF).
Period of shipment.
New England.
New York.
Canada.
Num-
ber of
mills.
Shipped.
Aver-
age re-
ceipts
per 100
pounds.
Num-
ber of
mills.
Shipped.
Aver-
age re-
ceipts
per 100
pounds.
Num-
ber of
mills.
Shipped.
Aver-
age re-
ceipts
per 100
pounds.
1Q13
8
10
10
10
10
10
10
10
10
10
Tons.
367,358
405, 144
410,165
220,944
35,639
34,160
36, 838
38,110
38,364
37, 833
$1.91
.87
.88
.89
.87
.89
.89
.90
.91
.91
12
12
12
12
12
12
12
12
12
12
Tons.
339,500
344,237
322, 116
175,444
27,077
25,503
31,968
29,512
29,706
31, 67X
$1.96
1.94
1.92
1.98
1.94
1.94
1.96
1.97
2.01
2.05
7
8
9
9
9
9
9
9
8
8
Tons.
213, 303
303,800
336,472
193,344
30,154
32, 768
33,806
33, 805
31,367
31,444
$1.86
1.85
1.82
1.85
1.81
1.82
1.84
1.86
1.88
1.92
1914 ....
1915
1916 (first half)
January-June, 1916:
January
February
March . .
April
May
68
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 13. AVERAGE RECEIPTS PER 100 POUNDS OF NEWS-PRINT PAPER AT MILL
ON SHIPMENTS, BY DISTRICTS, 1913-1916 (FIRST HALF)-Continued.
Period of shipment.
North central United
States.
Pacific coast.
Num-
ber of
mills.
Shipped.
Aver-
age re-
ceipts
per 100
pounds.
Num-
ber of
mills.
Shipped.
Aver-
age re-
ceipts
per 100
pounds.
1913
6
7
8
8
8
8
8
8
8
8
Tons.
130,986
160,807
187,262
106, 110
17, 703
17, 102
18,463
16,898
18, 380
17,664
$2.03
1.97
1.95
2.04
1.96
1.98
1.98
2.03
2.08
2.18
3
3
3
3
3
3
3
3
3
3
Tout.
117,330
125,561
131,318
81,797
11,310
11,890
12,863
17,764
13,656
14,314
$2.20
2.17
2.13
2.15
2.17
2.04
2.19
2.11
2.21
2.21
1914
1915
1916 (first half)
January-June, 1916:
January
March .
April
May
June
Comparing the average receipts per 100 pounds at mill in the
different districts for the period 1913-1915, inclusive, it is seen that
the lowest averages were received by the mills in the Canadian dis-
trict, the range being from $1.82 to $1.86 per 100 pounds. Next in
order came the New England district with a range from $1.87 to
$1.91; then the New York district with a range from $1.92 to $1.96;
then the north central United States district with a range from
$1.95 to $2.03 ; and finally the Pacific coast district with the highest
prices, from $2.13 to $2.20. All districts maintained the same rank
during the first six months of 1916.
There was a slight decline in average receipts at mill in 1915 as
compared with 1913 in all the districts. The greatest decrease was
8 cents per 100 pounds in the north central United States district, the
receipts in 1913 being $2.03 while in 1915 they were $1.95. The
smallest decrease was 3 cents per 100 pounds in the New England dis-
trict, the receipts in 1913 being $1.91 while in 1915 they were $1.88.
The receipts declined 4 cents per 100 pounds in both the New York
and Canadian districts, and 7 cents per 100 pounds in the Pacific
coast district.
The average receipts for the first six months of 1916 increased
slightly over those in 1915 in all districts. The largest increase was
9 cents per 100 pounds in the north central United States district,
the average increasing from $1.95 in 1915 to $2.04 in the first six
months of 1916. The smallest increase was 1 cent per 100 pounds in
the New England district, the receipts increasing from $1.88 in
1915 to $1.89 for the first six months of 1916. The increases in the
other districts were 2 cents per 100 pounds in the Pacific coast dis-
trict, 3 cents in Canada, and 6 cents in New York.
PRICES 'OP NEWS-PRINT PAPEE. 69
Taking the first half of 1916 by months, the greatest increase in
average receipts per 100 pounds was in the north central United
States district, where the average of $1.96 per 100 pounds in Janu-
ary increased to $2.18 in June, an increase of 22 cents per 100
pounds. The smallest increase during this period was in the New
England district, where the average receipts increased from $1.87
in January to $1.91 in June, an increase of 4 cents per 100 pounds.
The increase in both New York and Canada was 11 cents per 100
pounds.
The small increase in the average receipts of manufacturers dur-
ing the first half of 1916, when prices were rising, is due to the fact
that the great bulk of the tonnage was being delivered on contracts
made before the rise in price began.
Section 5. Effect of contract system on prices.
Ordinarily a great increase in the price of any commodity is
accompanied by a decrease in consumption. The increase in the
price of paper during the first half of 1916, however, had only a
slight effect on the total consumption, as nearly all the large pub-
lishers were protected by low-priced contracts, which in most cases
still had six months or more to run and the increased price did not
affect them. Moreover, the few who did sign new contracts at the
higher prices were unable to reduce their consumption to any great
extent, because in most cases their competitors, who were still getting
paper at the old prices, were not disposed to curtail their consump-
tion.
The fact that most of the contracts gave the publishers a leeway
of from 5 to 10 per cent above or below the tonnage fixed as their
ordinary requirements increased the tendency of the contract system
to make consumption independent of price changes. Due to their
increased need, most of the publishers demanded the maximum ton-
nage under their contracts. When this did not satisfy their require-
ments they went into the open market. This, of course, largely de-
creased the proportion of paper that would have been available for
purchasers on current orders or on new contracts. The result was to
make the prices to these latter purchasers very high, which in turn
tended toward higher prices for contract renewals.
Section 6. Additional cost of paper to publishers in 1917.
The prices of contracts made at the close of 1916 generally ranged
from $2.50 to $3.50 f. o. b. mill, the majority being $3 or above,
which represented an advance to publishers of 65 cents in the mini-
mum and of $1.50 in the maximum per 100 pounds. In some cases
contracts were made in December, 1916, at $4.50 f. o. b. null, an
advance of from $2.50 to $2.65 per 100 pounds. What this advance
70
REPORT ON NEWS-PRINT PAPER INDUSTRY.
in price will mean to publishers during the year 1917 is indicated
by the following computation, which shows the increase in the cost
of paper for certain newspapers using various tonnages. Freight
and cartage charges were added to the 1917 prices to put them on
the same basis as the 1916 prices.
Increase in
Increase in
amount to be
amount to be
Tonnage
paid during
Tonnage
paid during
con-
1917 as com-
con-
1917 as com-
tracted
pared with
tracted
pared with
for, 1917.
that paid in
for, 1917.
that paid in
1916 for the
1916 for the
same tonnage.
same tonnage.
135
$2,983
5,040
$166,320
240
4,800
6,000
143,460
600
13,800
6,000
313,560
900
21,780
7,200
164, 160
1,200
27,3(50
8,500
193, 800
2,000
46,800
30,000
674, 400
5,000
114,000
Information obtained by the Commission indicates that this, in-
crease in paper cost will generally exceed the annual profits of hese
publications and in some cases will be several times the profits made
in any one year. If publications are considered which had contracts
in 1915 but have been forced to buy in the open market since their
contracts expired the increase in paper cost will be considerably
larger in proportion to the tonnage used than for those newspapers
shown above.
In addition to the greatly increased prices of contracts covering
1917, certain additional burdens and expenses must be borne by
publishers as a result of changes made in the provisions of the
contracts. (See p. 56.)
In attempting to meet the increased cost of news print the pub-
lishers have recourse to (1) cutting out unpaid subscriptions and
returns from agents; (2) reducing the size of their paper by cutting
out either news or advertising matter or both; (3) raising the price
of subscriptions and street sales; or (4) raising the rates for
advertising.
While these methods may be employed for a time without loss of
revenue, if they are pursued beyond a certain point and for any
length of time they may result in reduced receipts from sales and
advertising.
Moreover, it is not possible in all cases to increase sales prices and
advertising rates owing to competition from publishers who have
unexpired contracts for paper at low prices, or have their own mills
and who are thereby able to maintain low sales prices and advertising-
rates.
PBICES OF NEWS-PRINT PAPEE. 71
Section 7. Disparity in prices among publishers.
The rapid advance in the price of news print during 1916, coupled
with the contract system, has resulted in a great disparity in prices
paid by different publishers in the same locality for paper delivered
during the latter "part of the year. For example, publishers in the
eastern and middle western groups of States who had contracts
still in force that were made in 1915 were getting their paper in
December, 1916, at about $2 to $2.20 f. o. b. destination, while pub-
lishers in the same localities whose contracts were renewed . after
September, 1916, were paying from $2.65 to $3.65 and in some cases
even $4.65 f. o. b. destination for paper delivered the same month.
Many publishers whose contracts had expired and could not be
renewed were forced to go into the open market and to pay from $5.15
to $6.15 f. o. b. destination in carload lots for December deliveries.
The result has been that some of the publishers paying the higher
prices have been put at a distinct disadvantage as compared with
their competitors who were getting paper at the lower prices.
Inasmuch as many of the old Icw-priced contracts run over well into
1917, this condition will continue for some time in certain localities.
In this^ connection a New Jersey publisher made the following
statement :
The matter of discrepancy in price is one that concerns the
papers of the country even more than the large increase, because
it puts one at a tremendous disadvantage with another. For
instance, one paper in a town I heard of last night is paying
$2.25 when a competitor is paying $6.
The publisher of a daily paper in one of the smaller cities in New
York stated that he was paying $5 per 100 pounds for news print
while his competitor was paying $2.66 on a contract that would not
expire until April or May, 1917.
The disparity between the prices paid by country weeklies and city
dailies is much greater at present than was the case in 1915. In
1915 the country weeklies were paying $3 or less per 100 pounds,
while city dailies were renewing contracts at from $2 to $2.15 f. o. b.
destination, a difference of 1 cent per pound or less. In December,
1916, however, the country weeklies were paying between $6.50 and
$7.50 per 100 pounds, while most of the city dailies were renewing
contracts at from $2.50 to $3.50, although in some cases renewals were
made as high as $4.50 f . o. b. mill.
A representative of the smaller publishers made the following
statement in December, 1916 :
There never has occurred, with respect to the country
papers, a condition so serious as that which now confronts them.
They are facing a situation which, if continued, will mean ruin
72 REPORT ON NEWS-PRINT PAPER INDUSTRY.
to many men who have been conducting fairly prosperous busi-
ness concerns.
*******
It so happens that the alarming advance in the price of news
print and other papers falls more heavily upon the country
papers than those published in the cities, because they buy in
smaller quantities and the advance in prices has been much
greater to them than to those who buy in large lots and have
contracts for large supplies.
*******
Complaints are made by the country publishers of discrimina-
tion against them, a greater discrimination than is warranted
by the fact that they purchase in smaller quantities, the dif-
ferences between the prices paid by the country and city papers
now being so much greater than two }^ears ago. One publisher
inquires why he should pay $7 per 100 for paper while daily
papers in the larger cities are getting paper at $3.25 per 100.
The disparity in prices in the same localities is one of the diffi-
culties confronting publishers in 1917. The big increase in the prices
of contracts made for 1917 deliveries reduced somewhat the disparity
between them and open-market prices, and the softening of the
market which has occurred since January 1, 1917, has still further
reduced this disparity. Among the publishers having contracts
there also exists a considerable variation in prices. Some publishers
have contracts which run through or partially through the year
1917 at $2 or less f. o. b. mill; others have contracts renewed around
$2.50. A few are renewing at $4 or $4.50 per 100 pounds. This
disparity in prices which will continue through 1917 adds to the
serious consequences occasioned by the high cost of paper.
CHAPTEE IV.
JOBBERS' COMMISSIONS AND MARGINS OF GROSS PROFIT.
Section 1. Introduction.
In this chapter are shown the gross profits obtained by the prin-
cipal paper jobbers and selling agents on sales of news-print paper
in 1916 and one or more prior years.
These gross profits are shown in the form of percentages on the
cost price to the jobbers for merchandising or buy-and-sell transac-
tions and in the form of rates of commission for commission business.
In the former case, for example, paper costing $2 per 100 pounds and
sold at $2.25 would show a margin of 25 cents or 12.5 per cent on the
cost price. This margin of profit is gross, since it includes the cost
of doing business.
Information relative to the distribution of news-print paper by
jobbers and commission merchants was obtained from dealers in
practically all the large commercial centers of the East, the Middle
West, and the Pacific coast. In the Southern States the relatively
small number of dealers handling news-print paper were not visited
by representatives of the Commission owing to lack of time. The
operations of these jobbers, as far as news print is concerned, are
confined largely to the distribution of sheet news to publishers of
weekly newspapers. The conditions under which news-print paper
is bought and sold by jobbers in southern territory, it is believed, are
not materially different from the conditions existing among the small
jobbers in other sections, whose records were examined by the Com-
mission.
There are two general methods of handling news-print paper by
jobbers, namely, direct shipments from the mill, and shipments
from the jobber's own stock. In the case of direct shipments the
paper is snipped from the mill directly to the consumer according
to instructions furnished by the jobber. In cases where the jobber
has two or more customers in the same locality, their requirements in
some instances are combined in one shipment and consigned to the
jobber who delivers the paper from the railroad station to the
consumer. In the case of sales from stock as distinguished from
direct shipments, the paper is distributed by the jobber from his
own warehouse as orders are received.
73
74 REPORT ON NEWS-PRINT PAPER INDUSTRY.
The margins of profit and commissions hereafter shown are only
for transactions involving shipments directly from the mill to the
consumer. Commission business is wholly of this character, as are
also most of the buy-and-sell transactions for carload lots. In the
latter case the purchase and sale of the paper by the jobber are
practically contemporaneous transaction^, each usually involving
the same quantity of paper, so that his-T*ecords show the purchase
price and sales price for each transaction. Where orders are filled
from stock carried in the jobber's warehouse or storeroom, the cost
price is difficult of ascertainment. On this account no attempt has
been made to secure the margins of profit on such sales.
It should be noted, also, that the margins are based on trans-
actions in which the terms of delivery to the jobber and publisher
were the same. For example, where the jobber purchased f. o. b.
mill and sold f. o. b. destination or sidewalk, the transportation
charges paid by the jobber were ascertained and included in his
cost price before the margin of profit was computed.
There are a number of dealers in the more important commercial
centers who buy and sell news print on a large scale, and in addition
several concerns which dispose of the product of paper mills on com-
mission. The news print handled by these commission houses is to
a large extent obtained directly from .the manufacturer and is sold,
as a rule, in large quantities either to city dailies or to jobbers scat-
tered throughout the country. These jobbers in turn supply daily
papers of small circulation and country weeklies. Margins on sales
by one jobber to another are not included in this discussion.
The jobbers from whom information was obtained have been ar-
ranged according to location into three groups as follows:
(1) Eastern group. The Eastern group includes the New Eng-
land States, the States of New York, New Jersey, Delaware, Mary-
land, and Pennsylvania. The figures presented for this territory are
based on data obtained from an examination of the records of 27
dealers. In this group are included two important companies which
sell the entire product of a number of paper mills on commission.
Jobbing transactions in this territory include the distribution of a
relatively large volume of news-print paper to the metropolitan
dailies, at commissions ranging from 2.5 per cent to 5 per cent.
(2) Western group. The Western group includes Stales extend-
ing from Ohio as far west as the Rocky Mountains. It includes the
cities of Cincinnati, Detroit, Chicago, St. Louis, Kansas City, Omaha,
St. Paul, and Minneapolis, which are distributing centers for news
print produced by the paper mills of the Middle Western States bor-
dering on the Great Lakes and western part of the Province of
Ontario. The greater part of the requirements of weekly newspapers
JOBBERS' COMMISSIONS AND MARGINS OF GROSS PROFIT. 75
in this section is supplied by jobbers. Information was obtained in
this territory from 23 jobbers.
(3) Pacific coast group. The Pacific coast group includes the
States west of the Rocky Mountains. The newspapers of large cir-
culation in this territory, to a great extent, buy paper directly from
mills of the Pacific Northwest. An extensive jobbing business is
carried on in the larger cities with publishers of dailies and weekly
papers in smaller towns. The data presented for this territory are
based on an examination of the records of seven jobbers.
The information obtained from the various jobbers has been so
arranged as to show the margins on contract and open-market sales
separately.
In order that the significance of the figures may be clearly under-
stood, it is important to note that they represent, in some cases, only
one of a series of cumulative margins included in the price paid by
the publisher for paper. In the process of distribution to papers of
relatively small circulation news print, in some instances, passes
through the hands of two or more jobbers before reaching the
publisher. The margins received by all jobbers in such cases are
obviously materially greater in the aggregate than the last margin
made on the final transfer of the paper to the consumer.
It must be remembered also that the margins are shown by the
percentage they bear to the jobbers' cost prices. Therefore as prices
advanced in 1916 the same percentage represented a larger actual
profit, expressed in dollars and cents, than was the case in- 1915.
This is especially the case with market sales where the advance in
price was greatest.
Section 2. Margins of profit on contracts.
The distribution of news-print paper by more important jobbers,
as noted in the preceding chapter, is governed to a great extent by
contracts executed contemporaneously with the manufacturer and
publisher. Contract sales on commission are negotiated with pub-
lishers on the basis of terms previously agreed upon between the
manufacturer and the commission merchant. In many cases, how-
ever, the jobber buys and sells on his own account, the difference
in the prices paid and received constituting his margin of gross
profit.
Most of the paper sold by jobbers on contracts is in rolls. For
that reason the margins shown in this section are on roll paper only.
Jobbers' commissions and margins on contracts for 18 tons or over
of news-print paper in rolls are shown in the following table for the
years 1913, 1914, and 1915, and for the first half of 1916:
76
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 14. JOBBERS' COMMISSIONS AND MARGINS, IN PERCENTAGES OF COST PRICE,
ON CONTRACTS WITH PUBLISHERS FOR 18 TONS AND OVER OF NEWS PRINT PAPER
IN ROLLS, 1913-1916 (FIRST HALF).
Date ol signing contract.
Commissions.
Margins.
Tons.
Percent.
Tons.
Per cent.
Low-
est.
High-
est.
Aver-
age.
Low-
est.
High-
est.
Aver-
age.
Eastern:
1913
70,473
106, 771
97,405
87, 050
4,375
9,119
80,163
4,390
1.4
2.4
1.5
2.0
1.3
1.2
1.0
3.0
5.0
5.0
5.0
4.5
3.0
3.7
4.0
3.0
3.7
3.3
3.1
3.0
1.9
2.7
1.3
3.0
14,366
20,853
19,349
1,789
36,289
18,095
28, 814
11,062
0.1
1.6
.8
3.4
.3
.8
.8
2.2
9.6
13.7
24.5
17.0
23.1
15.6
12.2
37.8
4.0
4.3
5.0
8.9
3.2
4.2
3.8
6.5
1914
1915.
1916 (first hall)
Western:
1913
1914
1915
1916 (first half) . ...
The relatively small tonnages for the first half of 1916 are due
to the fact that few contracts are made during the first six months
of the year.
The commissions of eastern jobbers ranged from 1.4 per cent to
5 per cent during the period covered. There was .little change in the
average commissions, the highest being 3.7 per cent in 1913 and the
lowest being 3 per cent in the first half of 1916. The margins of
. profit on purchases and sales showed a wider range and a higher
average than the commissions. The range was from 0.1 per cent to
24.5 per cent, the latter figure, however, being for 1915. There was
a continuous advance in the average margin of profit from 4 per
cent in 1913 to 8.9 per cent in the first half of 1916.
The commission business of western jobbers was done at rates
ranging from 1 per cent to 4 per cent. The lowest average commis-
sion was 1.3 per cent in 1915 and the highest was 3 per cent during
the first half of 1916. The margins on purchases and sales ranged
from 0.3 per cent to 37.8 per cent, though it should be noted that the
usual margins were a little below 12 per cent. The average margins
increased from 3.2 per cent in 1913 to 6.5 per cent in the first half
of 1916.
The average commissions of the eastern jobbers were slightly
higher than those of the western jobbers except in the first half of
1916, when they were the same. Their average margins of profit on
purchases and sales were also higher in all the periods.
As only a few contracts were made on the Pacific coast during
the first half of 1916, no margins have been included in the table for
jobbers in that group.
JOBBERS' COMMISSIONS AND MARGINS OF GROSS PROFIT. 77
Section 3. Margins of profit on open-market sales.
In this section are shown jobbers' margins of profit on open-
market transactions as distinguished from contract transactions.
Most of this business is handled on a buy-and-sell basis.
MARGINS ON SHEET NEWS, 19 15-191 6. The margins in percentages
are shown in the following table by ranges for 1 to 17 tons, inclusive,
of sheet paper, for the year 1915 and for the first and second quarters
of 1916.
TABLE 15. JOBBERS' MARGINS,IN PERCENTAGES OF PURCHASE PRICE, ON OPEN-
MARKET SALES TO PUBLISHERS OF 1 TO 17 TONS, INCLUSIVE, OF NEWS-PRINT
PAPER IN SHEETS, BY GROUPS, 1915-1916 (FIRST HALF). .
Date.
Eastern.
Western.
Pacific coast.
Lowest.
Highest.
Lowest.
Highest.
Lowest.
Highest.
1915 . .
2.4
3.0
8.3
27.9
45.8
56.6
2.2
4.2
4.3
32.5
34.3
101.0
4.0
4.0
7.6
47.5
29.1
32.5
1916:
First quarter . .
Second quarter
1 The weighted average margin of the jobber having this maximum margin was 41.9 per cent during the
second quarter of 1916. *
There was an increase in the minimum margins during the period
covered by the" table in all the groups shown. These minimum
margins are more characteristic of the returns generally received by
the jobbers than the maximum margins. The increase in the mini-
mum margins for the eastern group was from 2.4 per cent in 1915
to 8.3 per cent in the second quarter of 1916. The increase in the
Western group during the same period was from 2.2 per cent to
4.3 per cent. In the Pacific coast group the increase was from 4
per cent to 7.6 per cent.
The maximum margins increased during the same period in the
Eastern and Western groups in the former from 27.9 per cent to
55.6 per cent and in the latter from 32.5 per cent to 101 per cent.
The weighted average margin of the jobber having the maximum
margin of 101 per cent was 41.9 per cent during the second quarter
of 1916.
The maximum margins in the Pacific coast group were 47.5 per
cent in 1915 and 32.5 per cent in the second quarter of 1916.
PRICES AND MARGINS IN 1917. In response to a request of the Com-
mission a large number of jobbers furnished their cost and selling
prices for news-print paper in rolls and in sheets during January
and February, 1917. These prices have been tabulated for all trans-
actions where shipments were made direct from the mill to pub-
lishers and where the purchase and sale were on the same basis, i. e.,
f . o. b. mill or f . o. b. destination. Sales on commission, however.
78
REPORT ON NEWS-PRINT PAPER INDUSTRY.
are not included in the tabulations given below. The commission
in most cases was 3 per cent.
The tabulation for roll news is as follows :
JOBBERS' PRICES AND MARGINS PER 100 POUNDS ON OPEN-MARKET SALES OF
NEWS-PRINT PAPER IN ROLLS, JANUARY-FEBRUARY, 1917.
[Direct Shipments.]
Quantity in pounds.
Jobbers'
cost
price
f. o. b.
mill.
Jobbers'
selling
price
f. o. b.
mill.
Margins.
Amount.
Per cent
of cost
price.
Carload:
36000
$3.50
4.00
4.25
4.75
4.25
4.25
5.00
5.39
5.50
5.00
4.25
5.50
15.50
4.25
4.50
5.00
5.00
15.00
15.09
'5.09
15.09
5.00
15.00
14.76
5.00
15.50
15.51
' 5.09
$5.40
4.75
4.96
5.50
4.75
4.71
5.40
5.75
5.80
5.25
4.45
5.75
15.75
4*44
4.69
5.15
5.15
16.00
16.00
16.00
16.00
5.75
15.75
15.40
5.50
16.00
'6.00
i 5. 50
$1.90
.75
.71
.75
.50
.46
.40
.36
.30
.25
.20
.25
.25
.19
.19
.15
.15
1.00
.91
.91
.91
.75
.75
.64
.50
.50
.49
.41
54.3
18.8
16.6
15.8
11.8
10.8
8.0
6.7
5.5
5.0
4.7
4.5
4.5
4.5
4.2
3.0
3.0
20.0
17.9
17.9
17.9
15.0
15.0
13.4
10.0
9.1
8.9
8.1
41,795 . .
44,449
54,286
44,108
51,080
40,048
38,211
41,904
41,082
44,623
47,113
39,619
47,197
44,595
40,820
36,609
Less than carloa I:
5800
1,600
1,000
7 400
3,000
7 600
10,555 . .
2,840
10 200
10,472 . . .
1 000
i F. o. b. destination, or Jobbers' shipping station.
On carload lots the highest margin was $1.00 per 100 pounds, or
54.3 per cent of the jobber's cost price. This unusually high margin
was due largely to the low price $3.50 per 100 pounds that the
jobber paid for the paper. On the other sales in carload lots the
margins ranged from 15 cents to 75 cents per 100 pounds, or from
3 per cent to 18.8 per cent of the jobber's cost price. On less than
carload sales the margins ranged from 41 cents to $1 per 100 pounds
or from 8.1 per cent to 20 per cent of the jobber's cost price.
JOBBERS COMMISSIONS AND MARGINS OF GROSS PROFIT.
The tabulation for sheet news is as follows :
79
JOBBERS' PRICES AND MARGINS PER 100 POUNDS ON OPEN-MARKET SALES OF NEWS-
PRINT PAPER IN SHEETS, JANUARY-FEBRUARY, 1917.
pirect Shipments.]
Quantity
in
pounds.
Jobbers'
cost
price
f. o. b.
mill.
Jobbers?
selling
price
Co. b.
mill.
Margins.
Amount.
Per cent
of cost
price.
6,000
$4.09
$5.00
$1.00
25.0
12,000
4.00
5.00
1.00
25.0
2,000
4.85
6.00
1.15
23.7
1,000
4.85
6.00*
1.15
23.7
2,569
5.75
7.00
1.25
21.7
2,040
6.00
7.25
1.25
20.8
2,410
6.00
7.00
1.00
16.7
2,000
5.55
6.35
.80
14.4
2,000
5.80
6.60
.80
13.8
8,000
4.75
5.40
.65
13.7
2,000
4.75
5.40
.65
13.7
6,000
4.75
5.40
.65
13.7
4,345
5.50
6.25
.75
13.6
2,048
6.00
6.75
.75
12.5
2,000
' 6.05
6.75
.70
11.6
2,190
5.75
6.40
.65
11.3
10,000
6.00
6.65
.65
10.8
3,290
6.50
7.10
.60
9.2
560
5.50
6.00
.50
9.1
4,073
5.75
6.25
.50
8.7
4,000
6.00
6.50
.50
8.3
2,000
6.00
6.50
.50
8.3
8,000
5.00
5.38
.38
7.6
10,000
6.30
6.75
.45
7.1
8,000
5.50
5.85
.35
6.4
1,972
5.30
5.60
.30
5.7
1,575
5.00
5.25
.25
5.0
11,160
5.60
5.85
.25
4.5
All the sales of sheet paper shown in the above tabulation are on
less than carload lots. The margins range from 25 cents to $1.25
per 100 pounds, or from 4.5 per cent to 25 per cent of the jobbers'
cost price.
It will be seen from the two preceding tabulations that, in general,
the high prices charged by jobbers were due to the high prices they
had to pay for the paper, although in some cases they made ex-
cessive margins on paper that they got at low prices.
Section 4. Jobbers' cost of doing business.
In response to inquiries as to the jobbers' cost of transacting busi-
ness, representatives of the jobbers stated with reference to paper
shipped directly from the mill to the consumer that sales in large
quantities are profitable at a margin of 3 per cent. On direct ship-
80 REPORT OF NEWS-PRINT PAPER INDUSTRY.
ments as a whole a margin of 5 per cent was declared by a represen-
tative of a middle western jobber to be sufficient to yield a fair profit
to the dealer, while in the case of stock sales where the paper passes
through the jobbers' warehouse a margin of from 15 per cent to 20
per cent was declared to be sufficient. With respect to all classes of
transactions in news-print paper the jobbers' average cost of doing
business was placed at from 12 per cent to 17 per cent of the cost
price.
The principal items which enter into the jobbers' cost are s;.'d to
be the cost of soliciting business, bookkeeping, bad debts, interest
on the investment in warehouses*, and cartage to and from the jobbers'
warehouses. The jobbers' margins shown above obviously are not'
directly affected by the items of interest on investment in warehouses
nor by cartage charges, these margins being based on transactions in
paper shipped directly from the mill to the consumer.
Section 5. Conclusions.
A review of the foregoing data as to jobbers' margins in con-
nection with the section on prices indicates that the operations of
jobbers in news-print paper were as a whole more profitable in
1916 than during the period 1913-1915. That such is the case was
in fact admitted by jobbers themselves at a public hearing of the
Commission on conditions in the news-print industry. For sales
on commission the rate of commission remained substantially the
same, but the return to the jobber in 1916 exceeded the profits dur-
ing the earlier period because of the advance in the price of paper
on which the commission was based. On merchandising or buy-and-
sell transactions in 1916 the price of paper and the jobbers' percentage
of profit both advanced.
The return to the jobber at the higher margins and higher prices
prevailing in 1916 has obviously involved the inclusion in the price
to the publisher of a profit considerably in excess of the amount
regarded as a fair return to the jobber. In the case of market trans-
actions, for example, where prices to the publisher advanced from
around $2.25 per 100 pounds in 1915 to as high as $6 and over in
1916, a jobber with a minimum margin of 5 per cent on his cost price
of $2.14 in 1915 would receive less than 11 cents, whereas in 1916,
with a minimum margin of 6 per cent on his cost price of $5.66, he
would receive about 34 cents. The difference between jobbers' profits
in 1915 and 1916 is, of course, much greater when considered on the
basis of the maximum margins in each period.
It is thus apparent that the margins of jobbers were maintained
or advanced as the price of paper advanced in 1916 to such an extent
as to be a contributing cause to the greatly increased cost of paper
to the consumer. This was particularly true in the case of publishers
JOBBERS' COMMISSIONS AND MARGINS OF GROSS PROFIT. 81
of papers of relatively small circulation who as a class are largely
dependent on jobbers for their requirements and who to a great ex-
tent buy at the market prices. By January, 1917, however, the
greatly increased cost of paper to publishers buying from jobbers '
was due mainly to the high prices charged by the mills.
It is pertinent in this connection to refer to the reasons advanced
by jobbers in justification of the wide margin of profit shown in
some cases. Customers with a poor credit rating or known to be
slow pay, it is stated, are usually quoted higher prices than are
quoted to those known to be prompt in making settlement. In other
words, the credit risk is in the price. With the increase in price the
risk becomes greater for the reason that there are many publishers
who were able to pay promptly for a car of paper costing $800 in
1915, but who find it difficult to pay $2,000 for a similar quantity in
1916. The present high price of paper has caused the jobbers to
resort more frequently to sight draft attached to bill of lading on
shipments to customers considered poor pay. Most jobbers also
claimed that the cost of replacement should govern the selling price
regardless of the cost. If this theory is not followed, they say, the
jobber is apt to find himself stocked with high-priced paper when
the market declines. This contingency, however, as a general rule,
would arise only in the case of sales from stock and not in the case of
shipments directly from the mill to the consumer, which are the
bases of the foregoing tabulations.
In addition to the effect of the higher margins of profit on prices,
the jobbers handling news-print paper in 1916 were also responsible
in part for the creation of a panic among publishers. Whether done
with intent to profit thereby or not, the jobbers through their sales-
men and by correspondence contributed to the exaggeration of the
belief of an increasing shortage, which tended to cause prices to rise. 1
1 For copies of circulars sent out by jobbers in regard to high prices and scarcity of
paper, see Exhibit 6.
88569 17 6
CHAPTER V.
COSTS AND PROFITS OF MANUFACTURE.
Section 1. Introduction.
This chapter deals with the costs and profits of news-print paper
manufacturers and contains information throwing light on the
reasonableness of the prices presented in Chapter III. The cost
and profit data were obtained direct from the books of manufacturers
except for a few of the smaller companies, which furnished the fig-
ures by correspondence. The costs and profits of these smaller
companies have not been included in the tables of averages shown
in following sections, but are discussed separately.
Considerable difficulty was experienced in arriving at the true cost
of manufacture, because of the great variation found in the methods
of keeping costs. While some companies 'had very excellent systems,
others had systems so incomplete that it was difficult to ascertain
what their costs really were. This variation necessitated consider-
able readjustment and revision of the figures in order to put them on
a uniform basis and make them in accord with the best accounting
practice.
Even greater difficulty was experienced in arriving at the rate of
profit on investment in the news-print industry, because the cost of
investment could not have been obtained except by an exhaustive
investigation requiring a much longer period of time than could be
devoted to this matter. Several of the largest companies were amal-
gamations of smaller ones, the original cost of whose properties it
was impossible to ascertain. In most cases it was found that the
book investment of the news-print manufacturers was larger than
information obtained from paper-mill engineers showed to be neces-
sary to produce the particular tonnage, which indicated either that
the plants have been written up or that the original costs were too
high.
ITEMS ELIMINATED FROM COSTS. In arriving at the true cost of
manufacture, all intercompany and departmental profits have been
eliminated. These arise in a number of ways. Some companies have
wood-land subsidiaries or departments which transfer the pulp wood
to the manufacturing company or department at a profit. One com-
pany, in particular, showed substantial profits on the operations of
82
COSTS AND PROFITS OF MANUFACTURE. 83
its wood-land subsidiaries, while its news-print manufacturing busi-
ness appeared to be run at a loss.
Some companies charge their ground wood and sulphite into news-
print paper at a profit even when made at the same plant, this depart-
mental profit being carried directly to profit and loss. Other com-
panies charge these materials into news-print paper at cost when
produced in the same mill, but charge them in at a profit when trans-
ferred from one mill to another.
All intercompany rentals have been eliminated from costs. These
occur in a few cases where a plant is leased from a subsidiary or a
rental is paid to a subsidiary for the use of water power. All forms
of jjijkfiresk have been eliminated from costs, although but few com- )
panics included this item. Examples of such charges are bond in-
terest, interest on borrowed money, bank discounts, interest on ad- \
vances to subsidiaries, interest on timber-land investment, etc.
KEADJUSTMENT OF DEPRECIATION. The great variation in the prac-
tice of companies with respect to depreciation made it necessary for
the Commission to substitute computed depreciation figures for those
found in the books of companies, in order that the costs should include
a fair charge for this important item. Some companies did not
charge any depreciation at all. Others charged off certain amounts
each year according to temporary financial exigencies, carrying it
directly to profit and loss. A few companies have had their prop-
erties appraised by engineers and have carried a depreciation item
in their costs, based on expert information. The usual practice of
news-print paper manufacturers is to charge all of the depreci-
ation to news-print paper, or the final product. Only two com-
panies distributed the depreciation charge back to ground wood
and sulphite. Although this method is preferable, the Commission
found it impracticable to make an accurate distribution, and hence
in all cases has charged the depreciation entirely to news print.
One or two companies have been charging off depreciation at such
high rates that they have been reducing their plant investment
more rapidly than is necessary. Other companies have charged
their depreciation on an inflated book investment or have loaded
present costs with depreciation which should have been charged
in earlier years.
The Commission's depreciation figures were based on the testi-l
mony of expert mill engineers, which was to the effect that 3 per 1
cent on the investment in plant and equipment is sufficient to de- }
preciate the outlay in a mocfern mill. This conclusion was also
reached by the Tariff Board in its report in 1911. 1 Assuming
that the investment in depreciable property for a 100-ton mill is
1 Pulp and News-Print Paper Industry ; S. Doc. No. 31, 62d Cong., 1st sess., p. 74.
84 KEPORT ON NEWS-PRINT PAPER INDUSTRY.
$1,800,000, the depreciation charge at 3 per cent would amount to
about $1.75 per ton of product. This is based on a full produc-
tion for 310 days in the year. The depreciation charges of several
well-managed companies were found to approach quite closely to
this figure.
In the cost tables shown in this report $1.75 a ton has been
allowed on the cost of news-print paper for depreciation where
the ground wood and sulphite were not purchased. Where the
sulphite was purchased, $1.49 per ton was allowed; and where both
the ground wood and sulphite were purchased, $1.05 was allowed.
Such a scale of depreciation costs, while somewhat arbitrary, is
believed to be fair, and if in error it is probably too high.
In this connection it should be pointed out that the output of
a plant is not a satisfactory basis for computing depreciation and
has only been adopted in this case because it was impossible to
arrive at a more satisfactory basis.
MISCELLANEOUS READJUSTMENTS. Variation in the practice of com-
panies with respect to a number of items of expense has necessitated
making some readjustments. Some of the more important ones are
as follows:
Bad debts have been charged to selling expense and not included
in factory costs.
Taxes, insurance, and administration three items of general ex-
pense included in costs have been distributed to news-print paper,
sulphite, and ground wood instead of being charged entirely to news-
print costs. The basis of distribution, where not made by the com-
panies, was 50 per cent to paper and 25 per cent each to ground wood
and sulphite. Where a company did not have a sulphite plant, the
percentages used were 70 per cent to paper and 30 per cent to ground
wood. These percentages were found to be in use by various com-
panies.
Profits obtained from the sale of screenings, which are by-products
in the production of sulphite and ground wood, were deducted from
the cost of these materials, and profits obtained from the sale of waste
materials such as felts, rubber, scrap iron, etc., were deducted from
the item of repair materials in conversion costs. In a few cases
where the information warranted the depletion charges found in
the wood costs of companies obtaining pulp wood from lands owned
in fee were reduced. In one case where it appeared that the com-
pany had failed to make a proper allowance, a liberal depletion
charge was added to the costs.
The total changes made in the costs, as shown by the books of the
companies, after debiting or crediting certain items found in the
profit and loss accounts of companies, resulted in a deduction of only
$1.48 per ton from the average cost for United States mills in 1915,
COSTS AND PROFITS OF MANUFACTURE. 85
arid $1.15 per ton for the first half of 1916. For Canadian mills the
revisions resulted in small additions to the cost as shown by the
books.
Section 2. News-print paper costs, 1913-1916.
In order to ascertain what changes have occurred in the various
items entering into the cost of making news-print paper since 1913,
averages have been compiled for the principal mills in the United
States and Canada for the years 1913, 1914, 1915, and the first six
months of 1916. The figures included in these averages were ob-
tained from mills representing more than 80 per cent of the total
production in the United States for all years except 1913 and 90 per
cent or more of the production for Canadian mills except for the
first half of 1916, when the percentage was about 75.
The various items of cost are divided into three principal groups,
(1) stock, which includes sulphite, ground wood, and other mate-
rials used; (2) conversion, which includes labor, power, fuel, and
various supplies necessary to convert the raw materials into paper;
and (3) general expenses, which include taxes, insurance, adminis-
tration, etc. Depreciation, which is also a general expense, is shown
separately. Selling expenses are shown in a later section dealing
with profits.
Table 16 shows the average cost per ton, fey years, of making news-
print paper for United States mills, Canadian mills, and United
States and Canadian mills combined for the period 1913 to June 30,
1916, inclusive.
86
REPORT ON NEWS-PRINT PAPER INDUSTRY.
2 S {S 2 8
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s s s
S S S
^ <N ,-
5j g S 8 S
<N ' ^
8 S S3 S
S S 8
jjod
8 S3 8 S S S
5 8 % 2 2 f2
U 3 '
S
U2
S
00 <N
J c4
COSTS AND PROFITS OF MANUFACTURE.
87
3 8
o
S S
J
S
*
So S
8
s ^
s ^
S
3. S .
8
8
8-
S
S5
& s
8
2 8
M
S
tf
2
S
JH CJ
eo
S ^
S
S S
So
8
S - 1
S
8 g
8
2 g
"
SB
8
S S
S
s
^- -
a
4
S 8
S
s g
s
S ^
CO
9 S
8
S S
-
S
ri
g S
B
S S
^' * 4
rf
S S
S
S
CO
o<
i
General expenses:
Taxes and insurance
Administrative
Cost, not including depreciation. . . .
Depreciation
j
88 REPORT ON NEWS-PRINT PAPER INDUSTRY.
The table shows that the total cost of making news-print paper,
including depreciation, was somewhat lower at the end of the three
and one-half year period than at the beginning. The average cost
for the United States mills covered by the table was $33.42 in 1913 as
compared with $31.93 in the first half of 1916. Likewise, the average
cost for the groups of Canadian mills shown in the table was $30.32
in 1913 as compared with $27.43 in the first half of 1916, a decline of
$2.89 per ton. The average cost for United States and Canadian
mills combined was $32.82 in 1913 and $30.99 in 1915 as compared
with $30.63 in the first half of 1916.
The average cost for United States mills in the first half of 1916
exceeded that of Canadian mills by $4.50 per ton, $4.44 of which is
due to the difference in the cost of sulphite and ground-wood pulp
and conversion labor.
It should be noted in discussing these costs that the number of
mills included in the average for each year is not exactly the same.
This does not materially affect the results, however, because of the
large tonnage included. If, for instance, the figures for 1915 and the
first half of 1916 were made strictly comparable in this respect, the
difference between them would be reduced somewhat but the cost for
the 1916 period both for United States and Canadian mills would
still be a few cents lower.
The average cost per ton for stock used by United States mills de-
clined in the same manner as the total cost of making paper, but the
conversion cost decreased between 1913 and 1915 and then increased
in the first half of 1916 about 40 cents per ton. This increase was due
mainly to an increase in the cost of fuel. General expenses increased
in 1914, decreased in 1915, and increased again in the first half of
1916.
The average cost for stock used by the Canadian mills shown in the
table was about 21 cents per ton higher in 1914 than in 1913 but de-
clined in 1915 and the first half of 1916. The total conversion cost
declined steadily from 1913 to the first half of 1916 being $1.30 per
ton lower in the latter period. The total general expense showed the
same downward trend.
Turning to particular items it is seen that the average cost of
sulphite per ton of paper, on the whole, showed a slight decline in
both the United States and Canada. The cost of ground wood per
ton of paper also showed a small decline, except for Canadian mills,
in 1914, where the inclusion of two new mills in the averages raised
this cost to about 50 cents per ton. As sulphite and ground wood
constitute about 60 per cent of the total cost of paper, the decline
in the cost of these items was the most important factor causing the
decline in the total cost of manufacture between 1913 and the first
COSTS AND PROFITS OF MANUFACTURE. 89
half of 1916. The items that showed the most noticeable increase
in cost in the first half of 1916 were fuel, felts, wires, and repair ma-
terials. Higher prices, apparently, were paid for these materials on
all new contracts. Of these various items the cost of fuel is the most
important, since it represents about 6 or 7 per cent of the total cost
of making paper.
While there was a general increase in the rate of wages in a num-
ber of mills during the spring of 1916, the cost of conversion labor
per ton of paper did not increase, probably on account of the fact
that increased production reduced the unit cost of this item. For
example, the labor cost per ton of one large company declined
steadily, although two increases in their scale of wages were made
during the period covered. The output of this company, however,
increased more than 45 per cent in three and one-half years.
AVERAGE COSTS FOR SECOND HALF OF 1916. In December, 1916, the
Commission secured cost data from 23 mills in the United States for
a pajrt of the second half of 1916. The period covered for most of
these mills was four months ; for a few it was three months, and for a
few others it was five months. These mills during the first half of
1916 produced about 60 per cent of the total production of the United
States and about 75 per cent of the tonnage included in the tables of
the Commission for previous periods. No adjustments were made in
these data, and the average results are compared with the unrevised
costs as shown by the companies for the first half of 1916. Though
seven mills showed a decline in costs for the latter period, the average
cost for all mills was $1.50 per ton higher than the average cost for
the same mills in the first half of 1916. This was due chiefly to the
increase in the cost of ground wood, labor, and wires.
Although the cost of producing sulphite increased during this
latter period, as shown in section 3 of this chapter, the cost of sulphite
per ton of paper produced was less. Apparently this was due to the
fact that the mills were using a smaller proportion of sulphite in the
manufacture of news print.
In February, 1917, the Commission made a further examination of
costs, obtaining data from 27 mills in the United States for either
the month of December, 1916, or January, 1917. These mills rep-
resent about 65 per cent of the total production in 1916. The results
for this one-month period show that the costs for the various mills
had increased from $1 to $19.23 per ton, the average cost for all
mills being $5.52 per ton higher than the average cost for the same
mills in the first half of 1916.
90
REPORT ON NEWS-PRINT PAPER INDUSTRY.
PERCENTAGE OF COST. The percentage of the total cost of manufac-
ture of news-print paper attributable to each of the various items of
cost for United States and Canadian mills combined during the
period 1913 to 1916, first half, are shown by Table 17 following:
TABLE 17. PERCENTAGE OF TOTAL COST OF PRODUCING NEWS-PRINT PAPER AT-
TRIBUTABLE TO PARTICULAR ITEMS UNITED STATES AND CANADIAN MILLS
COMBINED 1913-1916 (FIRST HALF).
Item.
1913
1914
1915
First half
1916.
Stock:
Sulphite
Per cent.
24.41
Per cent.
23.69
Per cent.
23 66
Per cent.
23 36
Ground wood
34.71
34.97
34.67
34 30
Fillers
1.18
1.14
1 20
80
Alum.. .
.62
.54
.63
63
Sizing .
.35
.30
28
21
Miscellaneous
1.72
1.85
2.26
1 96
Totla .
62.89
62.49
62.70
61 26
Conversion:
Labor..
10 20
10.17
10 16
9 99
Felts
2.57
2.48
2.35
2.51
Wires..
1 16
1.08
1 24
1 36
Belting
.28
.33
.30
.30
Lubricants
.26
.26
.25
.22
Repairs.
3.97
3.91
3.29
3.54
Fuel
6.39
6.36
6.35
7.28
Power and water rentals
.76
.00
1.14
1 08
Miscellaneous
3.37
3.55
3.56
3.60
Total
28.96
29.04
28.64
29.88
General expense:
Taxes and insurance . .
1.19
1.36
1.18
1.33
General and administrative
1.82
1.92
2.00
1.96
Ttal
3 01
3 28
3 18
3 29
Depreciation
5 14
5 19
5 48
5.57
Total cost.. .
100 00
100 00
100 00
100.00
The table shows that during the three and one-half year period the
cost of sulphite per ton of paper represented from 23.4 to 24.4 per
cent of the total cost of manufacture and the cost of ground wood
per ton of paper from 34.3 to 35 per cent of the total cost. The two
items together represented from 57.7 to 59.1 per cent of the total cost
of manufacture, while all other items of stock together represented
only from 3 to 4 per cent. Of the total cost of ground wood and
sulphite about 68 per cent is represented in the cost of pulp wood
used, which item represents about 40 per cent of the total cost of
making paper.
COSTS AND PROFITS OF MANUFACTURE.
91
Total conversion costs per ton of news-print paper, of which about
a third was labor, represented from 28.6 to 29.9 per cent of the total
cost of manufacture. The other important conversion items were as
follows : Fuel, 6.4 to 7.3 per cent ; felts, wires, belting, and lubricants
together, 4.1 to 4.4 per cent; repairs (including repair material and
repair labor), 3.3 to 4 per cent; power, from 0.8 to 1.1 per cent;
miscellaneous expenses (includes finishing, mill office, and other mis-
cellaneous operating expenses), 3.4 to 3.6 per cent.
The total general expenses, excluding depreciation, per ton of news-
print paper represented from 3 to 3.3 per cent of the total cost of
manufacture, of which about one-third was attributable to taxes
and insurance and two-thirds to other general and administrative
expenses.
The item of depreciation, as computed by the Commission, repre-
sented from 5.1 to 5.6 per cent of the total cost of making news-print
paper.
COST OF NEWS-PRINT PAPER, BY GROUPS OF MILLS. The differences
in the cost of production of the domestic news-print mills included
in the table of average costs is shown by Table 18 below, which groups
these mills into six classes and shows the number included, tonnage
represented, percentage of the total tonnage, and the average cost
for each group for the years 1913, 1914, 1915, and the first half
of 1916.
TABLE 18. COST OF PRODUCTION OF NEWS-PRINT PAPER IN UNITED STATES MILLS
COVERED BY THE INVESTIGATION, ARRANGED BY GROUPS ACCORDING TO COST
PER TON, 1913-1916 (FIRST HALF).
Group.
Nurnbar
of mills.
Produced.
Per cent
of total.
A verage
cost per
ton.
1913.
I (less than $27)
2
Tons.
169 548
18
$26 51
II ($27 and less than $30)
3
82 773
8 7
27 57
III ($30 and less than $33)
1
75 290
8
30 97
IV ($33 and less than $36)
g
214, 678
22 7
34 66
V ($36 and less than $40)
14
361 602
38 3
36 93
VI ($40 and over)
2
40,472
4 3
40 80
Total.
30
944,363
100
33 42
1914.
I (less than $27)
3
192 705
18 5
26 27
II ($27 and less than $30)
1
59, 681
5.7
27.17
Ill ($30 and less than $33)
4
210 113
20.1
31 66
IV ($33 and less than $36)
12
229 201
22
34 97
V ($36 and less than $40)
13
338, 522
32.4
37.32
VI ($40 and over)
2
13 308
1 3
40 43
Total
35
1, 043, 530
100
33 08
92
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 18. COST OF PRODUCTION OF NEWS-PRINT PAPER IN UNITED STATES MILLS
COVERED BY THE INVESTIGATION, ARRANGED BY GROUPS ACCORDING TO COST
PER TON, 1913-1916 (FIRST HALF) Continued.
Group.
Number
of mills.
Produced.
Per cent
of total.
Average
cost per
ton.
1915.
I (less than $27)
3
Tons.
195 830
19 1
$26 64
II ($27 and less than $30)
2
138, 934
13.5
28.51
III ($30 and less than $33)
8
260,505
25.4
31.64
IV ($33 and less than $36)
11
276, 672
27.0
34.75
V ($36 and less than $40)
g
120 199
11 7
37 74
VI ($40 and over)
3
33, 321
3.3
43.67
Total
35
1, 025, 461
100.0
32.21
1916 (first half).
I (less than $27)
2
47 438
8 8
25.56
II ($27 and less than $30)
4
146,850
27.2
28.10
Ill ($30 and less than $33)
10
150 233
27 8
31.30
IV ($33 and less than $36)
8
117,729
21.8
34.96
V ($36 and less than $40)
6
34, 441
6.4
37.03
VI ($40 and over) . .
4
43, 147
8.0
41.76
Total
34
539,836
100.0
31.93
In 1913, while the average cost of all the 30 mills was $33.42 per
ton, the cost of the groups ranged from $26.51 for the two lowest mills
combined to $40.80 for the two highest mills combined. The range
for individual mills was from $26.38 to $40.90 per ton. About 27
per cent of the total tonnage was produced for less than $30 per ton,
and 57.4 per cent was produced for less than $36 per ton.
The range of costs for the 35 mills by groups in 1914 was from
$26.27 for the three lowest mills combined to $40.43 for the two high-
est mills combined, while the average cost for 35 mills was $33.08.
The lowest individual mill cost was $26.14 per ton, and the highest
$40.47. In this year only 24.2 per cent of the total tonnage was pro-
duced for less than $30 per ton, and 66.3 per cent was produced for less
than $36 per ton.
In 1915 the costs for 35 mills by groups ranged from $26.64 per ton
for the three lowest mills combined to $43.67 for the three highest
mills combined, while the average cost for 35 mills was $32.21. The
lowest cost for a single mill was $25.77 per ton, and the highest $44.41
per ton. In this year about 33 per cent of the total tonnage was pro-
duced for less than $30 per ton, and 85 per cent for less than $36
per ton.
In the first half of 1916 the range of costs for 34 mills by groups
was from $25.56 per ton for the two lowest mills combined to $41.76
per ton for the four highest mills combined, the average cost for 34
COSTS AND PROFITS OF MANUFACTURE. 93
mills being $31.93 per ton. The lowest cost in this period was $24.93
per ton and the highest cost $46.94 per ton. In this period 36 per cent
of the total tonnage was produced for less than $30 per ton, and 85.6
per cent for less than $36 per ton. Sixteen mills had an average cost
of less than $33 per ton as compared with only 13 mills in 1915.
It should be noted that the proportion of news-print paper pro-
duced by mills having a cost of $40 or over increased during the three
and one-half years from 4.3 per cent to 8 per cent of the tonnage cov-
ered by the table. Also the range in costs of individual mills was
greater for the first half of 1916 than for 1915, the high cost in the
1916 period, $46.94 per ton, being considerably higher. (See p. 95.)
In 1913, of the 7 Canadian mills whose costs were obtained, 3
would fall in Group II, 3 in Group III, and 1, with a cost of $37.17,
in Group V. In 1914, 4 Canadian mills would fall in Group II
and 5 in Group III, there being none that would fall in either of
the remaining groups. In 1915, 3 of the 11 Canadian mills would
fall in Group I, the lowest cost being $25.71 per ton, 5 would fall in
Group II, and 3 in Group III. In the first half of 1916, 4 of the
10 Canadian mills would fall in Group I, with a cost less than $27
per ton, 4 would fall in Group II, and 2 in Group III. The lowest
cost for any Canadian mill in this year was $25.68 per ton.
Incomplete cost data were secured, largely by correspondence, from
15 additional mills in the United States, which data have not been
included in the tables above. These mills produced in 1915 and the
first half of 1916 about 13 per cent of the total production. The
average cost for these mills as reported to the Commission, and with-
out any revision, was $37.97 per ton in 1915 and $37.81 for the first
half of 1916. Had these additional mills been included in Table 16
above, more than 95 per cent of the domestic production would have
been accounted for in 1915 and about 93 per cent in the first half of
1916. The average cost for the United States with these additional
mills included would have been $32.96 per ton in 1915 and $32.73 per
ton in the first half of 1916.
If the 15 additional mills had been included in Table 18, 1 would
fall in Group III, 4 in Group IV, 5 in Group V, and 5 in Group
VI in 1915, and in the first half of 1916, 1 would fall in Group III.
4 in Group IV, 4 in Group V, and 5 in Group VI, while 1 mill did
not manufacture news print in this year.
COST OF NEWS-PRINT PAPER BY INDIVIDUAL MILLS. The differences
in the principal items of cost of production of news-print paper for
the domestic mills are shown in Table 19 below, which gives sepa-
rately for each mill, whose cost was secured from its books, the cost
of sulphite, ground wood, miscellaneous stock materials, conversion,
general expenses, and depreciation per ton of news-print paper pro-
94
REPORT ON NEWS-PEINT PAPER INDUSTRY.
duced for the year 1915 and the first half of 1916. The mills are
arranged in order of the lowest costs. Hence a particular mill may
not have the same number in 1915 as in 1916.
TABLE U. COST OF MANUFACTURE PER TON OF NEWS-PRINT PAPER FOR PRINCI-
PAL UNITED STATES MILLS, 1915-1916 (FIRST HALF).
Mill No.
Stock.
Total
conver-
sion.
General
expenses.
Deprecia-
tion.
Tota
cost.
Sulphite.
Ground
wood.
Miscella-
neous.
Total.
1915:
$7.23
6.52
8.18
6.90
6.36
7.48
7.20
5.39
6.69
9.22
7.02
6.82
7.08
4.91
5.94
7.03
6.10
8.55
8.16
6.66
8.40
6.93
6.72
6.80
10.64
6.61
9.13
8.59
9.44
8.52
7.79
12.44
4.55
8.44
10.69
$9.00
8.96
8.73
8.59
10.85
10.26
11.17
12.78
12. 4(5
12.35
10.70
11.45
12.33
11.56
11.43
14.37
14.03
12.70
12.68
13.07
10.53
16.03
15.41
13.18
11.78
14.87
14.09
14.03
11.70
13.79
12.75
12.78
16.63
14.43
13.73
$1.62
.61
1.65
.68
1.80
1.25
1.42
1.52
1.43
1.59
.31
1.61
.74
1.40
1.59
2.08
1.65
.77
2.28
2.04
.82
2.01
1.58
1.80
2.69
1.70
3.07
.83
1.57
.90
1.58
1.63
2.43
2.19
.90
$17. 85
16.09
18.56
16.17
19.01
18.99
19.79
19.69
20.58
23.16
18.03
19.88
20.15
17.87
18.96
23.48
21.78
22.02
23.12
21.17
19.75
24.97
23.71
21.78
24.51
23.18
26.29
23.45
22.71
23.21
22.12
26.85
23.61
25.06
25.32
$5.06
8.46
5.55
9.21
7.78
7.77
8.42
8.43
7.41
6.27
10.95
9.95
10.24
12.25
11.51
8.16
10.12
8.99
8.93
11.15
11.77
8.01
8.85
11.34
8.77
10.73
8.22
10.81
11.05
10.64
11.38
8.85
13.35
14.37
16.18
$1.11
.38
1.08
.39
.77
1.97
.90
1.20
1.55
1.17
1.38
.64
.51
1.34
1.23
.60
.87
1.82
1.41
1.09
1.90
.69
1.04
.99
1.37
1.12
.99
1.34
1.97
1.64
2.72
1.80
1.84
1.57
1.16
$1.75
1.75
1.75
1.75
1.74
1.72
1.48
1.49
1.48
1.45
1.75
1.75
1.75
1.75
1.75
1.66
1.71
1.75
1.64
1.74
1.75
1.53
1.69
1.74
1.41
1.75
1.49
1.40
1.37
1.75
1.46
1.64
1.75
1.75
1.75
$25.77
26.68
26.94
27.52
29.30
30.45
30.59
30.81
31.02
32.05
32.11
32.22
32.65
33.21
33.45
33.90
34.48
34.58
35.10
35.15
35.17
35.20
35.29
35.85
36.06
36.78
36.99
37.00
37.10
37.24
37.68
39.14
40.55
42.75
44.41
2
3
4
5
6
7
8
9
10
11 . .
12
13
14
15
16
17
18
19
20
21
22
23 . .
24
25
26
27
28
29
30
31
32
33
34
35
Average
7.47
11.63
1.39
20.49
9.00
1.03
1.69
32.21
COSTS AND PROFITS OF MANUFACTURE.
95
TABLE 19. COST OF MANUFACTURE PER TON OF NEWS-PRINT PAPER FOR PRINCI-
PAL UNITED STATES MILLS, 1915-1916 (FIRST HALF) Continued.
Mill No.
Stock.
Total
conver-
sion.
General
expenses.
Deprecia-
tion.
Tota
cost.
Sulphite.
Ground
wood.
Miscella-
neous.
Total.
1910 (first half):
1
$7.70
7.41
6.70
7.51
6.13
6.48
4.32
7.12
5.82
6.95
5.87
8.12
7.01
4.80
6.71
6.61
7.72
6.96
6.02
9.49
8.02
7.97
6.65
7.93
8.34
8.61
8.35
9.52
7.67
7.39
7.04
13.07
8.75
11.32
18.18
8.71
9.08
8.39
11.35
10.67
13.87
8.80
13.44
9.81
11.79
11.00
11.30
12.21
10.43
11.71
13.06
14.02
13.74
11.93
14.16
10.92
16.55
13.01
12.73
11.69
13.37
12.89
12.76
14.66
13.68
11.89
15.22
16.59
$1.21
1.27
.04
.91
1.51
1.07
.74
.22
1.65
1.71
.90
.40
.40
.10
.15
.65
.06
.42
.08
2.51
1.11
.73
1.13
.51
1.33
2.30
.76
3.62
1.85
1.38
3.10
2.55
1.22
1.68
$17.09
17.39
15.82
16.81
18.99
18.22
18.93
16.14
20.91
18.47
18.56
19.52
18.71
18.11
18.29
19.97
21.84
22.40
20.84
23.93
23.29
19.62
24.33
21.45
22.40
22.60
22.48
26.03
22.28
23.43
23.82
27.51
25.19
29.59
$5.36
5.96
9.31
9.13
6.30
8.17
7.93
10.73
7.^3
9.09
10.39
8.39
11.28
11.63
11.65
9.69
8.93
8.63
11.14
8.98
9.61
12.66
9.04
10.75
11.38
10.68
11.53
8.17
12.84
12.22
12.73
9.68
15.76
14.46
$.73
.71
.50
.52
1.90
.82
2.03
1.75
1.27
2.02
.71
L78
.74
1.12
1.15
1.58
.79
.68
.92
1.28
1.08
1.73
.85
1.84
.90
.99
.29
.41
.06
.15
.00
.75
.32
.14
$1.75
1.75
1.75
1.75
1.49
1.74
1.45
1.75
1.48
1.75
1.75
1.75
1.75
1.75
1.75
1.75
1.46
1.70
1.75
1.34
1.75
1.75
1.56
1.75
1.75
1.39
1.38
1.49
1.75
1.75
1.48
1.65
1.75
1.75
$34.93
25.81
27.38
28.21
28.68
28.95
30.34
30.37
31.09
31.33
31.41
31.44
32.48
32.61
32.84
32.99
33.02
33.41
34.65
35.53
35.73
35.76
35.78
35.79
36.43
36.66
36.68
37.10
37.93
38.55
40.03
40.63
44.02
46.94
2
3
4
5
G
7
g
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30 . .
31
32
33
34
Average
7.33
11.33
1.09
19.75
9.40
1.08
1.70
31.93
The table brings out the remarkably wide range of mill costs for
all items except depreciation which was computed by the Commis-
sion, as stated above. (See p. 83.)
In 1915 the cost of sulphite ranged from $4.55 per ton in mill No.
33 to $12.44 in mill No. 32, while in the first half of 1916 the range
was from $4.32 in mill No. 7 to $13.07 per ton of paper produced in
mill No. 32. The cost of ground wood in 1915 ranged from $8.59 for
mill No. 4 to $16.63 per ton of paper for mill No. 33, while in the first
half of 1916 the range was from $8.18 for mill No. 1 to $16.59 for
96 REPORT ON NEWS-PRINT PAPER INDUSTRY.
mill No. 34. The cost of miscellaneous stock materials also differed
widely in the various mills due, no doubt, to some extent to the dif-
ference in the quantities of clay, alum, sizing, etc., used. The total
stock cost in 1915 ranged from $16.09 per ton in mill No. 2 to $26.85
in mill No. 32, and in the first half of 1916 from $15.82 per ton in
mill No. 3 to $29.59 in mill No. 34. Mills having the lowest total cost
generally have the lowest stock cost, since the cost of stock materials
constitutes, such a large proportion of the total cost of manufacture.
Of the 19 mills in the first half of 1916 whose total costs were less
than $35 per ton, in only 4 mills did the stock cost exceed $20 per
ton, and of the 15 mills whose total cost exceeded $35 per ton, in only
1 was the stock cost less than $20 per ton.
The conversion costs in the various mills show as wide a range as
stock costs. In 1915 the range was from $5.06 per ton for mill No. 1
to $16.18 for mill No. 35, while in the first half of 1916 the range was
from $5.36 per ton for mill No. 1 to $15.76 for mill No. 33. In the
first half of 1916 of the 16 mills, whose conversion costs exceeded $10
per ton, the total cost was less than $35 per ton in only 6 mills. Con-
version costs are affected by various factors, such as location of mills
with respect to fuel and power, efficiency of equipment, difference in
wages paid, etc.
General expenses ranged in 1915 from $0.38 per ton for mill No. 2
to $2.72 per ton for mill No. 31, and in the first half of 1916 from
$0.50 per ton for mill No. 3 to $2.03 per ton for mill No. 7. In the
first half of 1916 of the 20 mills, whose average cost for general ex-
penses exceeded $1.10 per ton, the total cost was less than $35 per
ton in 9 mills. General expenses are affected mainly by differences
in officers' salaries and other administrative expenses.
Depreciation ranged from less than $1.35 per ton of product in
mills which produce no sulphite and only a portion of the ground
wood used to $1.75 per ton in mills which produce all of both mate-
rials used.
Section 3. Sulphite costs, 1913-1916.
The changes that have taken place in the cost of producing sul-
phite in United States and Canadian mills during the years 1913,
1914, 1915, and the first half of 1916 are shown in Table 20 below.
These averages include all of the mills having sulphite plants from
which news-print costs were obtained and show the details of the
item " sulphite " in the news-print costs shown in Table 16. Nine
of the news-print mills in the United States did not have sulphite
plants, but they produced only about 10 per cent of the total ton-
nage of news print manufactured. All of the Canadian mills in-
cluded in the table of news-print costs had their own sulphite plants.
No depreciation is shown, the charge being included in the news-
print paper costs as explained above. (See p. 83.)
COSTS AND PROFITS OF MANUFACTURE.
97
S(M
rH
g s s
si 's
2O
^-(
2 S S
si ' s
$ s
-i <N
111
& g S3
S ' 3
SO <M
TT CO
si ' 3
si ' 2
si ' a
Si '55
Si '53
s s
^ N
S g S5
si ' 55
88569 17 7
98 REPORT ON NEWS-PRINT PAPER INDUSTRY.
The table shows little variation in the average cost of producing
sulphite in the United States and Canada combined during the
period from 1913 to the middle of 1916. The average cost for the
varying number of mills in the United States and Canada was $30.64
per ton in 1913, $30.19 in 1914, $29.33 in 1915, and $29.10 in the first
half of 1916. If the figures were put upon a more strictly comparable
basis, by using the same mills for each year, the averages for 1915 and
the first half of 1916 would not be materially changed.
AVERAGE COSTS FOR SECOND HALF OF 19 ie. In December, 1916, the
Commission secured additional eost data covering a part of the year
since July 1, 1916, from 16 mills making sulphite in the United
States. While these costs covered periods ranging from three to five
months, the average period covered was about four months. These
mills during the first half of 1916 produced 79 per cent of the total
tonnage included in Table 20 above. No adjustments have been made
in these figures, and the average results are compared with the costs
as shown on the books of the companies for the first half of 1916.
The average cost of sulphite for the above 16 mills during the latter
part of the year was $1.75 per ton higher. This was due chiefly to
the increase in the cost of wood, sulphur, labor, and repairs. Com-
panies buying pulp wood were paying materially higher prices dur-
ing the latter part of 1916.
In February, 1917, cost data were secured from 15 mills in the
United States for the month of December, 1916, or January, 1917.
These mills during the first half of 1916 produced 74 per cent of the
total tonnage included. The average cost of sulphite for these mills
in this period was $3.38 per ton higher than the unrevised cost for
the same mills during the first half of 1916.
PERCENTAGE OF COST. The percentage of the total cost of produc-
ing sulphite attributable to particular items is shown by Table 21 fol-
lowing for United States and Canadian mills combined for the years
1913, 1914, 1915, and the first half of 1916.
COSTS AND PROFITS OF MANUFACTURE.
99
TABLE 21. PERCENTAGE OF TOTAL COST OF PRODUCING SULPHITE ATTRIBUTABLE
TO PARTICULAR ITEMS UNITED STATES AND CANADIAN MILLS COMBINED 1913-
1916 (FIRST HALF).
Item.
1913
1914
1915
First
half
1916.
Stock:
Sulphur
Per cent
10.38
Per cent.
10.35
Per cent.
10.21
Per cent.
9.77
Lime and limestone .
2.65
2.49
2.46
2.39
Wood >
54 69
54.28
55.53
56.36
Total . . . .
67.72
67.12
68.20
68.52
Conversion:
Labor
11 32
11 38
10 85
10 30
Felts 1 . . . .
.31
.32
.34
.40
Wires
07
06
06
10
Belting ...
39
.36
.26
.32
Lubricants
09
09
09
08
Repairs
5 61
5 43
5 15
5.36
Fuel
8 20
7 80
7 33
7 77
Power and water rentals
1 24
2 09
2 00
1.91
Miscellaneous
1 84
1 77
2 06
2 01
Total
29 07
29 30
28 14
28 25
General expense:
Taxes and insurance
1.25
1 28
1.24
1.26
General and administrative
1 96
2 30
2 42
1 97
Total ....
3 21
3 58
3 66
3 23
Total cost ! .
100 00
100 00
100 00
100 00
'Exclusive of depreciation.
The cost of stock in producing sulphite represents about 67.5 per
cent of the total cost, of which pulp wood, the principal material
used, represents about 55 per cent and* sulphur and limestone repre-
sent about 12.5 per cent.
The conversion cost represents from 28 to 29 per cent of the total
cost of producing sulphite. The principal items of conversion cost
are labor, which represents from about 10 to 11 per cent of the total
cost, and fuel, which represents from about 7 to 8 per cent of the
total cost.
COST OF PRODUCTION OF SULPHITE, BY GROUPS OF MILLS. The differ-
ences in the costs of domestic sulphite mills are shown by Table 22
below, which groups the mills according to the cost per ton and
shows the number included, the tonnage represented, the percentage
of the total production, and the average cost for each group for the
years 1913, 1914, 1915, and first half of 1916.
100
KEPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 22. COST OF PRODUCTION OF SULPHITE IN UNITED STATES MILLS COVERED
BY THE INVESTIGATION, ARRANGED BY GROUPS ACCORDING TO COST PER TON,
1913-1916 (FIRST HALF).
Group.
Number
of mills.
Pro-
duced.
Per cfnt
of total.
Average
cost per
ton.i
1913.
I (less than $27)
2
Tons.
55 986
18 3
$24 84
II ($27 and less than $30) ... ....
2
29,575
9.7
27.52
TTT (pn and lss than $33"> j
6
104 062
34 1
31 62
IV ($33 and less than $36) ... . ...
6
91,423
29.9
34.08
V ($36 and over)
24 485
8
37 65
Total ....
19
305 531
100
31 20
1914.
1 (less than $27)
II ($27 and less than $30 ^
2
2
60,311
28 597
18.6
8 9
25.03
27.43
III ($30 and less than $33)
9
143 064
44 5
31 51
IV ($33 and less than $36)
6
73 263
22 8
35.36
V ($36 and over)
2
16 298
5 2
36 34
Total
21
321 533
100
31 05
1915.
I (less than $27)
3
82 311
25.2
24.67
II ($27 and less than $30)
4
58 049
17 8
28 17
III ($30 and less than $33)
4
65 825
20.2
31.34
IV ($33 and less than $36)
6
86 658
26 6
34.79
V ($36 and over)
5
33 250
10 2
38.14
Total
22
326 093
100.0
30.70
1916 (first half).
I (less than $27) .
3
28 125
14 4
22.97
II ($27 and less than $30)
3
42 305
21.6
27.63
Ill ($30 and less than S33)
4
49 571
25 3
31.09
IV ($33 and less than $36)
6
43 617
22.3
34.06
V ($36 and over)
4
32 029
16 4
36.85
Total
20
195 647
100
30.78
1 Exclusive of depreciation.
While the figures for the different years are not strictly compar-
able on account of the different number of mills for which data
were available, they show that the percentage of sulphite produced
by mills having a cost less than $33 per ton was fairly uniform, being
62 per cent in 1913 and 61 per cent in the first half of 1916. The
proportion of sulphite produced by the groups having a cost of $36
or over, however, increased from 8 per cent in 1913 to over 16 per
cent in the first six months of 1916.
Section 4. Ground-wood costs, 1913-1916.
All of the companies operating news-print mills included in Table
16 operate one or more ground-wood mills, and Table 23 shows the
average cost of production of ground wood for the United States
mills, for Canadian mills, and for the United States and Canadian
mills combined.
COSTS AND PROFITS OF MANfrtf AG.TURE.
101
st half
916.
S S 3 S S'-
' : '^N : f^. */;
First half
1916.
irst half
1916.
8i-H
i-t
2C<
i-i
a s?
102 REPGllT OX NEWS-PRINT PAPER INDUSTRY.
These iiv3.rrc.sre costs, are shown by items for the years 1913, 1914,
1915, "and the first six months of 1916. The costs do not include a
depreciation charge which, as noted in section 1, is charged to the
news-print paper in which the ground wood is used.
The table shows but little change in the average cost of manufac-
turing ground wood between 1913 and the first half of 1916. Al-
though the same number of mills is not included in each year, the
relation between the costs for the various years would not change
materially by making the figures strictly comparable in this regard.
The cost of pulp wood is the most important item, and it should be
noted that much of this material used in the first half of 1916 was
purchased under old contracts made at low prices. The next most
important item in cost per ton is labor, which in general showed a
downward trend per ton both in the United States and in Canada.
This was no doubt due chiefly to the increased output of the mills.
The cost of producing ground wood has been higher in the United
States than in Canada, the difference in the first six months of 1916
being $3.23 per ton, this being chiefly due to the difference in the cost
of the pulp wood used.
AVERAGE COSTS FOR SECOND HALF OF 19 1 6. In Decemjber, 1916, the
Commission secured cost data from 35 mills in the United States
covering a part of the period since July 1, 1916. The average period
covered by these cost data was about four months but for individual
mills ranged from three to five months. These mills during the first
half of 1916 produced 75 per cent of the total tonnage included in the
tables/ These figures have not been revised and are compared only
with the average costs as shown on the books of the companies. The
average cost of ground wood for all mills in the latter part of 1916
was $1.06 per ton higher than the average cost for the same mills
during the first half of the year. The important items which in-
creased were wood, labor, and repairs. The increase in wood costs
for the latter part of the year was due to the fact that logging costs
had increased and materially higher prices were paid for pulp
wood purchased in 1916. Overhead expenses were also slightly
higher for the latter period, due to the decrease in output of several
of the mills during the summer months.
Additional cost data were secured in February, 1917, from 40 mills
in the United States for either the month of December, 1916, or Janu-
ary, 1917. These mills during the first half of 1916 produced 79 per
cent of the total tonnage of the mills included. The average cost of
ground wood for these mills during this one-month period was $3.13
per ton higher than the unrevised cost for the same mills during the
first half of 1916.
COSTS AND PROFITS OF MANUFACTURE.
103
PERCENTAGE OF COST. The importance of pulp wood and various
other items of expense included in the cost of producing ground
wood is shown by Table 24, which gives the percentage of the total
oost attributable to each item for United States and Canadian mills
combined for the years 1913 to 1915 and first half of 1916.
TABLE 24. PERCENTAGE OF TOTAL COST OF PRODUCING GROUND WOOD ATTRIBU-
TABLE TO PARTICULAR ITEMS UNITED STATES AND CANADIAN MILLS COM-
BINED 1913-1916 (FIRST HALF).
Item.
1913
1914
1915
First
half
1916.
Wood
Per cent.
65.04
Per cent.
64.86
Per cent.
67.11
Per cent.
68.85
Conversion:
Labor .
16.38
16.11
15.00
14.12
Stones
.86
.94
.82
.92
Felts
.57
.57
.55
.57
Wires
19
.19
.21
.27
Belting
.45
.43
.35
.34
Lubricants . . ....
.24
.22
.20
.17
Repairs
5 83
5.62
5.07
4 65
Power and water rentals
3.87
4.21
4.20
3.98
Miscellaneous
2.11
2.25
2.43
2.28
Total
30 50
30 54
28 83
27 30
General expense:
Taxes and insurance
1 86
1 78
1 46
1.49
General and administrative
2.60
2.82
2.60
2.36
Total
4 46
4 60
4.06
3.85
Total cost *
100 00
100 00
100 00
100 00
1 Exclusive of depreciation.
The cost of wood was the chief item, representing 69 per cent of
the total cost in the first half of 1916 and 65 per cent in 1913.
Next in importance in 1916 came labor (14 per cent) and repairs
(4.6 per cent). Felts, wires, and belting taken together made less
than 2 per cent of the total cost per ton of gro v und wood.
AVERAGE COST OF PRODUCING GROUND WOOD, BY GROUPS OF MILLS. The
differences in the cost of production of the domestic ground-wood
mills included in the table of average costs above are shown by Table
25 following, which groups the mills into five classes and shows the
number included, the tonnage represented, the percentage of the
total tonnage, and the average cost per ton for each group for the
years 1913, 1914, 1915, and the first half of 1916.
104
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 25. COST OF PRODUCTION OF GROUND WOOD IN UNITED STATES MILLS COV-
ERED BY THE INVESTIGATION, ARRANGED BY GROUPS ACCORDING TO COST PER
TON, 1913-1916 (FIRST HALF).
Group.
Number
of mills.
Pro-
duced.
Per cent
of total.
Average
cost per
ton.i
1913.
I (less than $10 50)
1
Tons.
75 990
10 9
$10 37
II ($10. 50 and less than $12 50)
3
100 346
14.4
10 99
III ($12 50 and less than $15)
12
193 320
27 7
13 94
IV ($15 and less than $17
15
184 970
26.5
16 13
V ($17 and over) v
14
143 596
20.5
18.40
Total
45
698 222
100
14 63
1914.
I (less than $10.50)
1
88 584
11.5
10.40
II ($10 50 and less than $12 50)
4
137 689
17 9
10 97
III ($12.50 and less than $15)
13
127 475
16 5
14 23
IV ($15 and less than $17)
21
290 257
37 7
15 79
V ($17 and over)
11
126 012
16.4
18.29
Total
50
770 017
100.0
14.46
1915.
I (less than $10 50)
II ($10.50 and less than $12 50) ....
5
223 777
26.5
11.23
Ill ($12 50 and less than $15)
21
370 896
43 9
14 23
IV ($15 and less than $17)
13
160 995
19 1
16 11
V ($17 and over) . . .
11
89 147
10 5
18 88
Total
50
844 815
100
14 29
1916 (first hall).
I (less than $10 50)
II ($10.50 and less than S12.50) .
7
175 339
34.3
11.29
Ill ($12 50 and less than $15 )
21
209 963
41 1
14 04
IV ($15 and less than $17)
12
89 736
17.5
15.97
V ($17 and over)
7
36 205
7 1
IK. 69
Total
47
511 243
100
13.77
1 Exclusive of depreciation.
The table shows that the percentage of ground wood produced by
United States mills having a cost of over $17 per ton decreased
during the three and one-half year period. The decrease from 10.5
per cent to 7.1 per cent between 1915 and the first half of 1916,
however, might be reduced by the inclusion of mills for which data
were not available for the latter period.
Section 5. News-print paper profits per ton.
Table 26 below shows what changes have taken place in the profits
per ton of news-print paper sold since 1913, together with the cost
of sales and net selling prices for the same mills in Canada and the
United States from which the cost figures shown in preceding sections
for news print, sulphite, and ground wood were obtained.
COSTS AND PROFITS OF MANUFACTURE.
105
CO ^ 00 O
^ co co
fl i-H O
V QQ T-i
5 8
ss '
2 8
a
H eo to
r* ^ o>
g-ss
g s a
^H CO <O
1 s
S S 2 S
co ^ oi oi
iO 1C (N
CO t^- i-H
S S 8 S
g g
e* *
S S t2
co ^ 03
^ 58 8
S3 ^ S
O> O ^ J-i w
IS | 1 *
| g BS ||
^ e O ft ^ O OQ
106 REPORT ON NEWS-PRINT PAPER INDUSTRY.
The table shows the average results for United States mills and
Canadian mills, and for United States and Canadian mills combined,
for the years 1913, 1914, 1915, and the first half of 1916. The table
shows the tons sold and gross receipts per ton, the total amount of
deductions per ton from gross receipts for discounts and allowances,
freight, storage, and cartage, and the net sales per ton resulting from
such deductions, the cost of sales per ton including general expense
and depreciation, which is the total cost of manufacture with inven-
tory adjustments, selling expenses per ton, profits per ton, and the
percentage of profits to net sales.
The average gross receipts per ton for the varying groups of
United States mills were lowest in 1915 at $42.49 per ton and highest
in 1913 at $43.75 per ton. The gross receipts for the groups of
Canadian mills covered in the table were slightly lower, ranging from
$41.65 per ton in 1915 to $43.46 per ton in 1913. The total deductions
from gross receipts necessary to arrive at net receipts for the
United States mills showed a downward trend during the period,
ranging from $4.25 per ton in 1913 to $4.03 in the first half of 1916.
The total deductions for Canadian mills were slightly higher, rang-
ing from $5.32 in 1913 to $4.28 in the first half of 1916. This was
probably due to the higher freight rates from Canadian mills to the
United States market. Net receipts for the United States mills de-
clined from $39.50 per ton in 1913 to $38.45 per ton in 1915, and then
rose to $39.40 per ton in the first half of 1916. Likewise, net receipts
for the Canadian mills declined from $38.14 in 1913 to $37.34 in
1915, and then rose to $37.96 per ton in the first half of 1916. The
net receipts for the United States mills and Canadian mills com-
bined declined from $39.25 per ton in 1913 to $38.13 in 1915 and then
rose to $38.98 in the first half of 1916.
The cost of sales, including general expenses, for Canadian mills
and United States and Canadian mills combined, declined during
the three and one-half year period in the same manner as the cost of
manufacture shown in section 2. The cost of sales for Canadian
mills in the first half of 1916 was $4.60 less than the cost of sales for
United States mills.
Selling expenses for United States mills were lowest in the first
half of 1916 at 59 cents per ton and highest in 1915 at 64 cents per
ton. For Canadian mills selling expenses were highest in 1915 at
$1.02 per ton and lowest in 1913 at 86 cents per ton. The higher
selling expense for Canadian mills was probably due to the fact that
most of them sell through brokers and selling agents instead of
maintaining their own selling organization.
COSTS AND PROFITS OF MANUFACTURE. 107
The average profit per ton for the United States mills included
in the table was lowest in 1914 at $4.94 and highest in the first half
of 1916 at $6.75 per ton. The average profit per ton for Canadian
mills showed a steady increase during the three and one-half year
period, the lowest being $6.45 in 1913 and the highest $9.54 per ton
in the first half of 1916. This was an increase of $3.09 per ton over
the profit in 1913 and $2.79 per ton higher than the profit for United
States mills in the first half of 1916. Combining the United States
and Canadian mills, the average profit per ton was lowest in 1914
at $5.35 and highest in the first half of 1916 at $7.55.
The percentage of profit on net sales for United States mills ranged
from 12.8 per cent in 1914 to 17.1 per cent in the first half of 1916.
The percentage of profit on net sales for Canadian mills ranged from
16.9 per cent in 1913 to 25.2 per cent in the first half of 1916. For
the United States and Canadian mills combined the percentage of
profit on net sales ranged from 13.9 per cent in 1914 to 19.4 per cent
in the first half of 1916. The rate of profit on investment is shown
below. (See p. 110.)
As is the case with the cost tables in preceding sections, the profit
figures for each year are not strictly comparable with respect to the
number of mills included in the averages. This may explain, in part
at least, the decline in profits per ton of United States mills in 1914.
The relation between the profits for 1915 and the first half of 1916,
however, is not materially affected by the difference in the number
of mills included.
AVERAGE PROFITS OF UNITED STATES MILLS, BY GROUPS. The dif-
ferences in the profits per ton of United States mills are shown in
Table 27 below, which classifies the various mills into six groups
and shows for each the number of mills included, the tonnage repre-
sented, the percentage of the total tonnage sold, and the average
profit per ton for the years 1913, 1914, 1915, and first half of 1916.
Mills showing a loss are included in Group VI.
108
REPORT ON NEWS-PRINT PAPER INDUSTRY.
TABLE 27. VARIATIONS IN THE PROFITS PER TON OF NEWS-PRINT PAPER SOLD BY
UNITED STATES MILLS COVERED BY THE INVESTIGATION, BY GROUPS, 1913-1916
(FIRST HALF).
Group.
Number
of mills.
Tons
sold.
Per cent
of total
sales.
Average
profit per
ton.
1913.
I (($12 and over)
1
65,435
6.9
$12.00
11 ($10 and less than $12)
2
125,783
13.2
10.41
III ($8 and less than $10)
1
42, 156
4.4
9.81
IV ($6 and less than $8). .
4
141,981
14.9
7.14
V ($4 and less than $6)
8
232, 144
24.3
4.73
VI (Less than $4) . .
14
346, 558
36.3
1.90
Total
30
954,057
100.0
5. 53
1914.
I ($12 and over)
II ($10 and less than $12)
2
188,983
17.7
10.15
Ill ($8 and less than $10)
1
58,696
5.5
9.16
IV ($6 and less than $8)
3
160,832
15.1
7 11
V ($4 and less than $6) . .
5
85,759
8.1
5.61
VI (Lessthan$4)
24
571,358
53.6
2.07
Total
35
1,065,628
100.0
4.94
1915.
I ($12 and over)./... .
II ($10 and less than $12)
1
114. 749
11.0
ID :>"
III ($8 and les than $10)
7
312,457
29.8
9.07
IV ($6 and less than $8)
5
90, 493
8.6
6.99
V ($4 and less than $6) . .
6
169,885
16.2
4.92
VI (Less than $4)
16
359, 8*3
34.4
1.03
Total
35
1 047,427
100.0
5.60
191G (first half;.
I ($12 and over).. . . ...
3
58,683
10.7
12.58
II ($10 and less than $12) .
4
65,830
12.0
10.74
Ill ($8 and less than 110)
3
135, 202
24.7
9.36
IV ($6 and less than $8)
5
1>8. 999
12.6
6.87
V ($4 and less than $6)
7
74,728
13.8
4.64
VI (Less than $4)
12
142,994
26.2
1.08
Total. ..
34
546, 436
100.0
6.75
The above table shows that in 1913 the range of profits by groups
was from $12 per ton, high, for one mill to $1.90 per ton, low, for 14
mills combined. Two mills included in Group VI showed a loss of
about 28 cents per ton. The average profit for all 30 mills was
$5.53 per ton. Of the total tonnage included, 39.4 per cent was sold
at an average profit of more than $6 per ton, while 36.3 per cent was
sold at a profit of less than $4 per ton.
The range of profit by groups in 1914 was from $10.15 per ton for
2 mills to $2.07 per ton for 24 mills combined in Group VI. The
highest profit for an individual mill was $10.35 per ton, while of the
COSTS AND PROFITS OF MANUFACTURE. 109
mills included in Group VI 5 operated at a loss, the loss in 1 mill
being as much as $1.94 per ton. The average profit for all 35 mills
was $4.94 per ton. Of the total tonnage, 38.3 per cent was sold at an
average profit exceeding $6 per ton, while 53.6 per cent was sold at
a profit of less than $4 per ton.
In 1915 the average profit by groups ranged from $10.37 per ton
for 1 mill to $1.03 per ton for 16 mills. Of the mills included in
the latter group, 5 showed a loss during the year. The highest
individual profit for any mill was $10.37 per ton, while 1 mill showed
a loss of $7.19 per ton. Of the total tonnage represented, 49.4 per
cent was sold at an average profit of above $6 per ton, while 34.4
per cent was sold at an average of less than $4 per ton. The average
profits for any mill did not exceed $12 per ton in 1914 or 1915.
In the first half of 1916 the range of profit by groups was from
$12.58 per ton for 3 mills combined to $1.08 per ton for 12 mills.
Of the mills included in the latter group, 3 showed a loss. The aver-
age loss in 1 mill was $6.30 per ton. The highest profit shown in any
individual mill was $13.08 per ton. The average profit for all 34
mills was $6.75 per ton, or $1.15 per ton more than in 1915. Of the
total tonnage, 60 per cent was sold at an average profit exceeding
$6 per ton, while 26.2 per cent was sold at a profit of less than $4
per ton.
If the Canadian mills were classified in the same manner, 1 would
have been included in Group I, in 1913, 4 in Group IV, and 2 in
Group VI. In 1914, of the 9 mills whose average profit was $6.62
per ton, 1 would have been included in Group I, 1 in Group III, 2
each in Groups IV and V, and 3 in Group VI. In 1915, of the 11
Canadian mills with an average profit of $8.13 per ton, 2 would have
been included in Group 1, 1 in Group III, 5 in Group IV, 2 in Group
V, and 1 in Group VI. In the first half of 1916, of the 10 mills with
an average profit of $9.55 per ton, 2 would have been included in
Group I, 1 in Group II, 4 in Group III, 1 in Group IV, and 2 in
Group VI. The average profits for Canadian mills covered by the
investigation in the first half of 1916 exceeded the average profits in
1915 by $1.42 per ton.
The average profit of 15 additional mills in the United States not
included in the profit tables above, from which data were obtained
largely by correspondence without revision by the Commission, was
only 56 cents per ton in 1915. If grouped according to the classification
shown in Table 27, 1 mill would fall in Group V and 14 in Group
VI, 5 of which showed a loss in this year. In the first half of 1916
the average profit for these mills as reported to the Commission had
increased to $2.35 per ton. Classified by groups, 1 mill would fall in
Group IV, 1 in Group V, and 12 in Group VI. Only 1 mill of this
group of 15, however, showed a loss in this half year.
110 REPORT ON NEWS-PRINT PAPER INDUSTRY.
These 15 additional mills have a combined tonnage representing a
little less than 13 per cent of the total domestic production. If they
were included in the table of average profits per ton, the figures for
1915 and the first half of 1916 would represent about 95 per cent
and 93 per cent, respectively, of the total domestic production. The
average profit per ton, including these mills, would be $4.94 in 1915
and $6.15 in the first half of 1916.
Section 6. Profits on investment.
The Commission found it impracticable in some cases and im-
possible in others to determine the actual cost of investment of the
properties of domestic news-print companies, which is the only true
basis for reckoning the rates of profit. Many of the companies have
been reorganized, and the original records are not obtainable, and in
others, in order to arrive at the original cosjtof the properties acquired.
it would have been necessary to examine the financial statements of the
companies for several years. It was also found impracticable to sepa-
rate the investment in the news-print branch of the business from
the total investment. The total revised earnings, therefore, are com-
pared with the total net book investment, after making such revisions
as the available information permitted.
Comparable financial statements were secured from 15 companies
in the United States for the years 1915 and 1916. The total net book
investment of these companies in 1915 was about $140.000,000, while
the investment as revised by the Commission was about $116,000,000.
The companies included produced in 1915 about 90 per cent of the
tonnage represented in the cost tables and about 75 per cent of the
total production in the United States.
The total net book investment is obtained by combining the book
value of the real estate, buildings, equipment, etc., incidental to the
paper and pulp mills, the book value of the timberlands and water-
power properties, and the working capital (accounts and bills receiv-
able and cash less bills and accounts payable) as carried on the books
of the companies. Investments in sawmills, industrial railroads, etc.,
are also included, since the total earnings of the companies are in-
cluded. Where a reserve for depreciation was made this amount has
been deducted, since a liberal charge for depreciation has been allowed
in costs.
The Commission has revised the book investment of certain of these
companies where information obtained showed inflations in capital.
For example, it was admitted by an officer of one large company
that the original common stock of his company did not represent
tangible property. In other cases it was apparent that the invest-
ment in timberlands or water-power properties had been written up,
COSTS AND PROFITS OF MANUFACTURE.
Ill
while one company carried an item of good will on its books which
did not represent any investment cost. MctU>Cfc ??
Table 28 below gives the rates of profit on the net book investment
as shown by the companies and on the net investment as revised by
the Commission for the year 1915 and the first half of 1916.
TABLE 28. RATES OF PROFIT ON NET INVESTMENT OF 15 UNITED STATES COMPANIES,
1915-1916 CFIRST HALF).
[Revised earnings are compared with net investment as shown by the books and with net investment,
as revised by the Commission.)
Company.
1915
First half 1916.1
On in-
vestment
as shown
by books.
On in-
vestment
as revised
by Com-
mission.
On in-
vestment
as shown
by books.
On in-
vestment
as revised
by Com-
mission.
1 ...
*jfU
8.1
IJAJ
9.0
1.1
5.0
12.1
8.8
5.2
13.5
3.8
6.8
2.0
1.5
11.2
22.4
10.8
l*.i
9.0
1.1
5.0
12.1
8.8
8.0
13.5
5.2
8.5
2.0
1.5
11.2
12.6
11.9
14.4
19.3
6.0
7.6
23.0
8.6
4.9
11.8
*6.0
- 11.6
9.4
5.5
11.6
'2.6
15.8
14.4
19.3
6.0
7.6
23.0
8.6
7.5
11.8
8.2
14.5
9.4
5.5
11.6
2
3
4
5
6
g .
9
10
j|
12 - -
13
14
15
5.4
6.5
7.9
9.5
1 Annual rate for the 6-months' period of 1916 is shown
* Figures in italics indicate losses.
s Earnings of this company for the first half of 1916 include no revenue from sources other than mill
operations. This revenue in 1916 was about 0.7 per cent on the company's entire investment. Depre-
ciation and bond interest were computed on basis of the year 1915.
The revised rate of profit for the 15 companies combined was 6.5
per cent in 1915 and at the annual rate of 9.5 per cent in the first
half of 1916. The corresponding rates on the investment shown
by the books were 5.4 in 1915 and at the annual rate of 7.9 per cent
in the first half of 1916.
The rate of earnings of the individual companies on the invest-
ment as revised by the Commission ranged in 1915 from a loss of
11.9 per cent for 1 company to a profit of 13.5 per cent for another
company, and exceeded 8 per cent in the case of 8 of the 15 com-
panies. In the first half of 1916 the rate of earnings based on the
revised investment ranged from a loss of 2.6 per cent for one com-
pany to a profit of 23 per cent for another company. The rate of
112 KEPORT ON NEWS-PRINT PAPER INDUSTRY.
profit exceeded 8 per cent in the case of 10 companies during this
year.
The average rates of profit on investment in 1915 and in the first
half of 1916 (6.5 per cent and 9.5 per cent, respectively, as revised
by the Commission) are the rates earned on the companies' entire
business, including paper other than news print. An analysis of
the earnings, taking into account the fact that the 1916 figures cover
only six months, shows that the 50 per cent increase was due to an
increase of 20 per cent in news print earnings and of 192 per cent
on other business. As the profits per ton realized on some other
grades of paper were higher than on news print, the rates shown
in the table, especially in 1916, are above those actually attributable
to news print paper alone.
From the foregoing data it is apparent that, on the average, net
earnings in the news print business in 1915 were comparatively low.
However, it is probable that the rates of profit, if based on the actual
cost of investment, would be somewhat higher than those shown in
the table. The net book investment, excluding outside investments,
averaged about $35,000 per ton of daily output, and on the revised
investment about $30,000 per ton of daily output. The Tariff Board,
in its report l on the industry, stated that for an investment for power
and fully equipped and balanced plant $17,000 to $20,000 per ton
of daily output should be taken as a liberal estimate. To this, how-
ever, must be added provision for working capital and woodlands,
which brings the total estimated investment up to between $25,000
and $30,000 per ton of daily output. According to statements made
by manufacturers and opinions of experts, such an allowance for a
well-balanced mill, including working capital and necessary wood-
lands, is ample. On the $25,000 basis the average rates of profit
shown in Table 28 for total operations of 15 companies would have
been about 7.5 per cent in 1915 and about 11.5 per cent in the first
half of 1916. On the news print operations of these companies alone
the rate of profit in the first half of 1916 could hardly have been as
much as 10 per cent even on the $25,000 basis. Furthermore, avail-
able information that is not of a comparable character indicates that
the average rate of profit realized by the entire domestic news print
industry was somewhat less than is shown in Table 28.
In this connection the effect of the advance in prices of news print
should be noted. Both in 1915 and the first half of 1916 there were
24 mills in the United States which were making 85 per cent of the
total domestic output at costs varying, in round numbers, from $25
to $35 per ton. The bulk of their output is now being sold on an-
nual contracts at prices ranging from $60 to $70 per ton. Evidently
1 Pulp and News Print Paper Industry ; S. Doc. 31, 62d Cong., 1st sess., p. 73.
COSTS "AND PROFITS OF MANUFACTURE. 113
such prices provide a margin of $25 to $45 per ton over the above
costs. This margin, of course, must take care of increased costs be-
fore any increase in profits is obtained. Costs have increased in a
few peculiarly unfortunate mills as much as $15 per ton. An increase
of that amount in all of the 24 mills is practically impossible unless
some unforeseen calamity changes the situation entirely. But even
for the high cost mills present prices provide a margin of profit of
from $10 to $30 per ton as compared with the margins of $4.94 to
$6.75 per ton shown in Table 26.
Further, it should be noted that under normal conditions each fr
dollar added to the net margin between cost and price adds about 1 h
per cent to the rate of profit on an investment of $30,000 per ton of
daily output. Consequently, even if there should be a general in-
crease in costs of $15 per ton, these mills, without pushing their
machines above a normal output, would, at present prices, realize
profits ranging from 10 per cent to more than 30 per cent on in-
vestment.
Section 7. Conclusions.
There was no marked change in the average cost of producing
news-print paper in the United States and Canada during the
period from January 1, 1913, to June 30, 1916, covered by the Com-
mission's investigation. The prevailing impression that this cost
had increased considerably in the first half of 1916 was chiefly due
to the much advertised increase in wages and the high market prices
of some of the materials necessary to the manufacture of news
print. 1 Account was not taken of the fact that a large part of the
actual cost of making the paper, even in the last half of 1916, was
determined by contracts signed, wages paid, and expenses incurred
in 1914 and 1915, when prices were at their lowest ebb. Most of the
pulp wood used in 1916 was cut during the two preceding years and
most of the sulphite purchased in 1916 by mills not having their
own digesters was on contracts at 1915 prices. The same was gen-
erally true of coal and other materials. The cost in 1916, as shown
by the accounts, was also kept down by making a paper that con-
tained a smaller proportion of the relatively expensive materials,
such as sulphite, colors, and chemicals, than had been used formerly.
The greatly increased production also tended to reduce the cost per
ton for various items of expense.
The limited investigation which the Commission was able to make
of conditions in the last half of 1916 showed that current high costs
of materials and labor were beginning to increase the average cost of
producing news print. Nevertheless, it does not appear probable
1 The details regarding the increased cost propaganda promoted by the News-Print
Manufacturers Association are discussed elsewhere (see Chap. VII).
88569 17 8
114 BEPOKT ON NEWS-PRINT PAPER INDUSTRY.
that the increase in cost for the last half of the year over the first
could generally have exceeded $2 to $4 per ton of paper.
The Commission does not attempt to forecast the future course of
i news print costs. Certain important factors affecting it, however,
should be considered. The high cost of labor and materials is al-
ready in effect in many mills. In others it has only recently begun to
show in the cost of the finished paper; but in mills producing a con-
siderable part of the total product it will probably riot reach its full
effect before new low cost factors such as increased number of
domestic pulp mills and increasing imports of foreign pulp will have
reduced costs in the present high cost mills.
It does not appear that the average cost of news-print paper will
advance to a level corresponding to the spot prices of its constituent
elements during 1916, unless very abnormal and unexpected condi-
tions develop.
Two points affecting news-print manufacturers in the United
States should be pointed out: First, the cost of news print in Can-
ada, which covers about 26 per cent of the total supply of the United
States, is from $4 to $5 less per ton than in this country. Second,
some of the large publishers are already making their own news
print, and it is probable that others of equal financial ability Avill
build mills rather than for any length of time pay prices in excess
of cost of production plus a fair return on investment.
The prices made by the manufacturers at the end of 1916 did not
take full account of the situation as outlined above. It is clear that
the open-market prices during the last two or three months in 1916,
and from then to the present time, have in many cases been extor-
tionate. The contract prices charged many newspapers, especially
the smaller daily and weekly publications, have also been excessively
high. Such prices have in not a few cases been over $75 a ton and
have ranged as high as $100 and $110. A comparison of advances
in price with advances in cost of production shows an enhancement
in the former much greater than the increase in the latter.
These excessively high prices ignored the public interest, which
requires the maintenance of news-print prices both on a reasonable
level and, except for reasonable differences in quantity, freight, etc.,
on a parity between different publishers. It appears, moreover, that
these prices, in opposition to the long-time interests of the manufac-
turers themselves, tended to increase investment in news-print manu-
facture by newspaper publishers, to increase competition from
abroad, and to cause the immediate use of pulp-wood reserves that
would not, at lower prices, be thrown upon the market during 1917.
. The prices of $65 per ton or more on contracts made with larger
i newspapers toward the end of 1916, and now being charged, are
i also excessively high in comparison with costs, if a few mills of
COSTS AND PROFITS OF MANUFACTURE. 115
small tonnage and exceptionally high costs are left out of considera- /
tion. It should be emphasized that, in such times of abnormal costs
and prices, panic demand, and temporary decline in stocks, the
exaction of long-term contracts at inflexible prices is not only con-
trary to the public interest but is also unreasonable from a business
standpoint. With the restoration of more normal conditions such
terms are almost certain to become unreasonable to the purchaser.
If, on the other hand, costs were to increase further than anticipated
or a scarcity arise the seller might be injured. Under the existing
circumstances the best arrangement would be to make contracts on
a sliding scale based on cost, provided the base price were fair and
the terms of the contract were otherwise reasonable.
At least two companies, one of which has a very large produc-
tion, have generally refused to follow the excessive prices now often
charged, and have contracted to sell most of their 1917 production
for from $10 to $18 per ton below the most usual contract price of
$65. They have apparently acted according to their best business /
judgment and have refused to take advantage of the extreme neces-
sity of their customers for the purpose of exacting the highest possi-
ble price.
In the Commission's judgment the present prices of news-print
paper are above what is requisite for a profitable development of
the industry. It is clear, therefore, that they can not be long main-
tained except by a monopolistic control of the market.
CHAPTER VI.
SUPPLY AND DEMAND FACTORS.
Section 1. Introduction,
This chapter presents the information collected by the Commission
with respect to the demand for news-print paper in 1916 as compared
with prior years and the supply available to satisfy this demand.
Business prosperity in the United States in 1916 caused an unusual
domestic demand not only for news-print paper but for all grades
of paper, and the European war, by curtailing the production abroad,
caused an increased demand by foreign buyers in the markets of the
United States and Canada. The result was a considerable increase
in domestic consumption and a relatively large increase in exports.
The output of United States mills which, as shown in Chapter II,
declined in 1914 and 1915, showed a considerable increase in 1916,
and the output of Canadian mills, most of which is sold in the United
States, showed a large increase in 1916 over 1915, resulting in greatly
increased exports to this country. It appears, however, that the
increase in the supply coming from United States and Canadian
mills was not sufficient to meet the combined domestic and foreign
demand, for stocks on hand declined almost steadily throughout
the year 1916. The changes which occurred in production, imports,
exports, and stocks on hand during the years 1915 and 1916 are
shown by Table 29, following.
TABLE 29. STATISTICS OF PRODUCTION, IMPORTS, EXPORTS AND STOCKS OF NEWS-
PRINT PAPER IN THE UNITED STATES, 1915-1916.
1915
1916
Per cent
of in-
Items.
First
half.
Second
half.
Entire
year.
First
half.
Second
half.i
Entire
year.
crease of
year 1916
over 1915.
Stocks at beginning of period
Tons.
91,650
608 235
Tons.
77,524
630 887
Tons.
91,650
1 239 122
Tons.
68,912
673 737
Tons.
58, 572
681 459
Tons.
68,912
1 355 196
9 4
Imports
166 842
201 567
368,409
237,179
231 051
468 230
27.1
Total
866, 727
909, 978
1,699,181
979, 828
971, 082
1 892 338
11.4
Exports
25 752
29 410
55 162
34 213
42 115
76 328
3cS. 4
Available for consumption
Stocks at end of period
840,975
77,524
880,568
68,912
1,644,019
68,912
945,615
58,572
928,967
42 432
1,816,010
42, 432
10.5
Indicated consumption . . .
763,451
811, 656
1, 575, 107
887,043
886, 535
1,773,578
12.6
December figures for production and stocks estimated.
116
SUPPLY AND DEMAND FACTORS.
117
The table shows that domestic production increased during each
half-year period, beginning with the middle of 1915. The increase
for the year 1916 over 1915 was 9.4 per cent. Imports also showed
large increases for each half-year period, the increase in 1916 over
1915 being 27.1 per cent. Exports showed an even greater relative
increase, the quantity exported in 1916 being 38.4 per cent greater
than in 1915. This was only 5.6 per cent of the domestic pro-
duction, however, as compared with 4.5 per cent in 1915. Stocks
on hand decreased from 91,650 tons at the beginning of the year
1915 to 42,432 tons at the close of the year 1916, a total decrease
of 49,218 tons in two years. The increase in the indicated con-
sumption in 1916 over 1915 was 198,471 tons, or 12.6 per cent.
This increase was about double the normal annual increase, which
is estimated at 6 per cent. Information obtained by the Commis-
sion indicates that neither the domestic nor the foreign demand
was entirely satisfied by the quantity consumed or exported.
The percentage of increase of the indicated consumption by half-
year periods was as follows :
Per cent.
Second half of 1915 over first half of 1915 6. 3
First half of 1916 over second half of 1915 _ 9. 3
First half of 1916 over first half of 1915 j 16. 2
The indicated consumption for the second half of 1916 was very
nearly the same as for the first half. Eeports furnished the Commis-
sion by 92 large daily papers showed that their receipts of paper
on contract during the first half of 1916 were about 13 per cent
greater than for the first half of 1915. In additions-some of them
purchased considerable quantities in the open market, which would
probably "bring" the increase in receipts up to the 16 per cent shown
above.
Reports of shipments to customers on contract, obtained from the
principal news-print manufacturers of the United States and Can-
ada, show that 323 newspapers consumed more than 50 per cent of
the total indicated domestic consumption in each half-year period
since July 1, 1915. The following tabulation gives the figures in
detail :
Period.
Ship-
ments to
3?3 pa-
per,
Total
indicated
consump-
tion.
Per cent-
age of
total.
1915 second half
Tons.
435, 360
Tons.
811,656
53.6
1916:
First half
473, 098
887,043
53.3
Second balf
454,899
886,535
51.3
118 EEPOET ON NEWS-PRINT PAPER INDUSTRY.
The tabulation shows an increase in shipments to the 323 papers
for the first half of 1916 over the preceding half-year period of
nearly 9 per cent. This is about the percentage of increase for
the indicated consumption as shown above. The shipments by
mills to these 323 publications show a falling off of about 18,000
tons during the second half of 1916, while the total indicated con-
sumption during the second half of 1916 was approximately equal
to that of the first half. This is probably explained by the fact
that in the second half of 1916 the 323 publishers bought more paper
in the open market than they di'd in the first half, either because
the mill shipments did not meet their requirements or their contracts
had expired and were not renewed.
Section 2. Causes of domestic demand.
The increased demand by newspaper publishers in the United
States in 1916 was due both to an increase in circulation and to an
increase in the number of pages per issue. The increase in circulation
resulted partly from the interesting character of the news during
the year, there being an unusually large number of important news
subjects, such as the European war, Mexican troubles, railroad strikes,
presidential campaign, etc. The increase in the number of pages
per issue was due to enlarged space for both reading matter and
advertising matter but the latter seems to have been the more im-
portant ca'use. Reports from newspapers indicate that the pros-
perity of the country in 1916 was accompanied by a very large in-
crease in the demand for advertising space.
In addition to the demand from newspaper publishers there was
also an increased demand for paper for commercial purposes, and a
substitution of news print for book paper by some magazines and
periodicals, because of the greatly increased cost of book paper.
The domestic demand for news print paper in 1916 was intensified
by the development of a virtual panic among publishers who \vere not
protected by contract in their requirements, so that it gave the ap-
pearance of being much greater than it really was.
INCREASE IN CIRCULATION. The growth in circulation of news-
papers is shown by Table 30 below, compiled from sworn returns of
124 daily newspapers to the Post Office Department. The figures
shown represent the average daily paid circulation for six months'
periods from April 1, 1913, to October 1, 1916, and include news-
papers with a circulation of 50,000 or more published in cities of
100,000 population or over, which have furnished statements for the
entire period. One hundred and fourteen of these publications were
in the English language and 10 in foreign languages. The figures
for 44 of the papers include Sunday issues. The percentages of in-
SUPPLY AND DEMAND FACTORS.
119
crease are based upon the average daily circulation for the period
ending April 1, 1913.
TABLE 30. AVERAGE DAILY CIRCULATION OF 114 NEWSPAPERS IN ENGLISH AND
10 IN FOREIGN LANGUAGES WITH A CIRCULATION EXCEEDING 50,000 COPIES,
1913-1916.
Six months' period end-
ing-
Total English and foreign.
Total 114 English.
Total 10 foreign.
Circulation.
Per cent of
increase
over six
months'
period
ending
Apr. 1,
1913.
Circulation.
Per cent of
increase
over six
months'
period
ending
Apr. 1,
1913.
Circulation.
Per cent of
increase
over six
months'
period
ending
Apr. 1,
1913.
Apr. 1, 1913
13, 185, 708
13, 445, 022
13,700,957
14,815,094
14, 872, 576
15,371,809
15,335,885
15,969,150
12,599,073
12, 848, 063
12,959,978
13,957,128
13,878,557
14,379,881
14,372,351
14,989,007
586,635
596, 959
740,979
857,966
994, 019
991,928
963,534
980, 143
Oct. 1, 1913
2.0
3.9
12.4
128
16.6
16.3
21.1
2.0
2.9
10.8
10.2
14.1
14.1
19.0
1.8
26.3
46.3
69.4
69.1
64.2
67.1
Apr. 1, 1914 . .
Oct. 1, 1914
Apr. 1, 1915
Oct. 1,1915
Apr. 1, 1916
Oct. 1, 1916
The table shows that the average daily circulation of the 114 news-
papers printed in English showed the greatest increases during the
6-month periods from April to October of each year. The changes
in circulation of these papers from October 1 to April 1 were not im-
portant. The greatest increase, which occurred in 1914, amounted
to 7.7 per cent, as compared with 3.6 per cent in 1915 and 4.3 per
cent in 1916.
The average daily circulation of the 10 newspapers printed in for-
eign languages showed remarkable increases during each 6-months'
period until April 1, 1915. During the two following periods there
was a falling off of 3.1 per cent, while in the last period there was a
gain of 1.7 per cent.
The increase in daily circulation of the 124 daily newspapers in-
cluded in the table for the 6-months' period ending October 1, 1916,
over the preceding period was 633,265 copies, which represents an
increase in consumption of, roughly, 20,000 tons per year if it is
assumed that the average size of these papers was 14 pages. If the
average size was 16 pages, the increase in consumption would amount
to about 23,000 tons.
In addition to the 124 daily newspapers shown in the table, there
are about 2,300 other daily papers whose average daily circulation
would probably be about 7,000 copies. No attempt has been made to
ascertain what the increase in circulation or in the consumption of
news-print paper by these newspapers has been.
120
REPORT ON NEWS-PRINT PAPER INDUSTRY.
Table 31, following, classifies the 114 daily papers printed in Eng-
lish and shows the increase in the average daily circulation of each
class for the same 6-months' periods:
TABLE 31. AVERAGE DAILY CIRCULATION OF 114 NEWSPAPERS PRINTED IN ENGLISH
GROUPED ACCORDING TO CIRCULATION, 1913-1916.
6 newspapers
400,000
5 newspapers
300,000 to
9 newspapers
200,000 to
9 newspapers
1.50,000 to
20 newspapers
100,000 to
65 newspapers
50,000 to
and over.
400,000.
300,000.
200,000.
150,000.
100,000.
g
S
i
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g
S
3
O
Pn
g
5 fi
Six-month
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5
S w>
*
1^
1
<
<:
2
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period ending-
a,j
li
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9
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.E
& a
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i5
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r^
o
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a
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o S
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o .
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C3 "O CO
3 w
*^ CO
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J3 Wj
O'C 70
^ (/j
^ OT
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c -2 o>
JJ3
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S.2S
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c3 -2 o>
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Perct.
Perct.
Perct.
Perct.
Perct.
Perct.
Apr. 1, 1913
2,445
1,551
1,612
1,328
1,841
3,822
Oct. 1,1913
2,448
0.1
,579
1.8
1,622
0.6
1,335
0.5
1,937
5.2
3,927
2.7
Apr. 1,1914
2,502
2.3
,612
3.9
1,579
l t.O
1,367
2.9
1,970
7.0
3,930
2.8
Oct. 1,1914
2,665
9.0
,704
9.9
1,842
14.3
1,432
7.8
2,112
14.7
4,202
9.9
Apr. 1,1915
2,660
8.8
,705
9.9
1,840
14.1
1,418
6.8
2,093
13.7
4,163
8.9
Oct. 1,1915
2,765
13.1
,793
15.6
1,926
19.5
1,493
12.4
2,235
21.4
4,168
9.1
Apr. 1,1916....
2,794
14.3
,781
14.8
1,875
16.3
1,517
14.2
2,234
21.3
4,172
9.2
Oct. 1,1916
2,915
19.2
,888
21.7
1,980
22.8
1,571
18.3
2,283
24.0
4,353
13.9
The largest increase in circulation since April 1, 1913, amounting
to 24 per cent, was shown by the papers between 10Q,000 and 150,000
copies per day. Those between 200,000 and 300,000 made nearly as
great an increase, however. The smallest increase was made by the
papers between 50,000 and 100,000 copies.
INCREASE IN ADVERTISING. The volume of advertising determines
to a large extent the size of newspapers and is probably the most im-
portant factor affecting the consumption of print paper. Statistics
of advertising obtained by the Commission from 101 large daily
papers show the following increases in 1916 over 1915 :
Per cent.
January, 1916. over January, 1915 9.3
March, 1916, over March, 1915 11.1
May, 1916, over May, 1915 12. 9
June, 1916, over June, 1915 14.8
Published statistics of advertising for the principal daily papers
in New York, Philadelphia, Boston, and Chicago for the first half of
1916 also show large increases over the first half and second half of
1915, as Table 32 following indicates.
SUPPLY AND DEMAND FACTORS.
121
TABLE 32.-INCREASE IN THE COLUMNS OF ADVERTISING OF 40 LARGE DAILY NEWS-
PAPERS, FIRST HALF OF 1916 OVER PRECEDING HALF-YEAR PERIODS.*
City.
Number
of publi-
cations.
Total
number
of col-
umns of
adver-
tising
January
to June,
1916.
Percentage of increase, January to June,
1916, over-
July to
Decem-
ber, 1915.
January
to June,
1915.
July to
Decem-
ber, 1914.
January
to June,
1914.
New York
17
9
7
7
231,608
72, 176
95, 719
94,508
9.1
19.9
14.5
24.4
7.9
16.1
12.4
23.1
16.9
27.0
21.0
1.0
8.9
13.0
Boston
Chicago
Philadelphia
Total
40
494,011
14.9
12.6
1 Compiled from statistics furnished by one newspaper in each city, except Chicago, for
which the statistics were furnished by the Washington Press Co.
Seventeen daily papers in Greater New York had a total of
231,608 columns of advertising during the first six months of 1916,
which was 9.1 per cent greater than for the preceding six months
and 7.9 per cent greater than for the first half of 1915. Nine Boston
papers show an increase in the number of columns of advertising of
19.9 per cent over the second half of 1915 and 16.1 per cent over the
first half. Seven Chicago papers show an increase of 14.5 per cent
over the second half of 1915 and 12.4 per cent over the first half.
Seven Philadelphia papers show an increase of 24.4 per cent over
the second half of 1915 and 23.1 per cent over the first half. The
40 daily papers having an aggregate of 494,000 columns of advertis-
ing during the first six months of 1916 show an increase of 14.9 per
cent over the preceding six months and 12.6 per cent over the first
half of 1915.
The increase in the volume of advertising in 1916 shown by the
preceding tables necessitated a considerable although not corre-
sponding increase in the size of papers and in the consumption of
news-print paper. The increase in the price of paper and the
campaigns for curtailing consumption led to the introduction of
economies and changes which partially offset the demand for addi-
tional advertising space. In some cases the proportion of reading
matter to advertising was considerably reduced.
EFFECT OF PANIC CONDITIONS. Various factors contributed to the
creation of a panic among publishers in 1916, which caused a bidding
up of prices and gave the appearance of a much greater demand
and consequent shortage than actually existed. Trade reports were
replete with stories of rapidly increasing costs and declining stocks.
Publishers who " went shopping " among manufacturers and jobbers
were generally told that the latter had no paper to offer. This
122 REPORT ON NEWS-PRINT PAPER INDUSTRY.
threw them back upon the manufacturer or jobber who had origi-
nally supplied them, who was in a position to charge almost any
price he saw fit. In some cases the publisher could no longer obtain
paper from the original source of supply because the mill had been
sold or the machines had been changed to other grades of paper.
They were thus compelled to canvass every known source of supply
until paper could be found.
When contracts expired the mills in some cases would not renew
them. In other cases, when contracts were renewed, the tonnage
allotted was reduced below the actual requirements of the news-
papers, so that they were forced to seek additional supplies in the
open market.
A single publisher in quest of paper sometimes canvassed every
manufacturer within reach and also various jobbers and selling agents,
who in turn canvassed the mills from which they received their sup-
plies, causing a piling up of inquiries for paper which gave the ap-
pearance of a greater demand than really existed.
In some cases publishers bought more paper than they actually
needed and stored it as a protection against future shortage and high
prices. The quantity thus stored, however, was probably not large.
Section 3. Causes of foreign demand.
The keen foreign demand for news-print paper in the United States
and Canadian markets has been due to changed conditions abroad re-
sulting from the European war. Before the war Germany, Norway,
and Sweden were exporters of paper and paper materials. Austria
also exported some news print, and Finland supplied Russia. Eng-
land and France imported pulp and made most of their own paper.
The United States imported considerable quantities of chemical pulp
from Scandinavian countries as well as a few tons of news print. The
European war completely changed these conditions. Germany be-
came an importer of the bulk of Swedish pulp instead of an exporter
of pulp and paper. The supply of Russian pulp wood which Norway
uses in large quantities was cut off. Necessities of war compelled
Great Britain to requisition much merchant tonnage, and conse-
quently shipments of coal to Sweden were restricted. Thereupon, in
January, 1916, Sweden retaliated by declaring a virtual embargo upon
the exportation of chemical pulp to Great Britain. Since Sweden fur-
nished about two-thirds of the consumption of pulp in England,
amounting to 461,219 short tons, a severe shortage occurred in that
country. To make up this deficiency English consumers turned to the
Norwegian product, which soon sold at a premium. English paper
makers also became active buyers of paper and pulp in Canada
and the United States. A similar situation developed in France and
other European countries, resulting in shipments from the United
States to countries which normally never bought in our market.
SUPPLY AND DEMAND FACTORS. 123
It is reported that during the year 1916 French buyers tried to pur-
chase 60,000 tons of news print in the United States and Canadian
markets, offering attractive prices, but were unsuccessful. Since the
outbreak of the European war Australia and South America have
also been largely dependent upon American and Canadian sources for
their paper supply.
The foreign demand for news-print paper resulted in a large in-
crease in exports during the year 1916, as shown by Table 29 above.
The total exports, however, only amounted to 5.6 per cent of the
domestic production, as compared with 4.5 per cent for the previous
3 r ear. Canadian export statistics show that the quantity of print
paper exported to other countries than the United States was no
greater for the first seven months of 1916 than for the corresponding
months of 1915. There was- a large increase in the quantity of chem-
ical pulp, or sulphite, exported to Great Britain, however.
That no greater quantity of paper was exported from the North
American Continent was due to the fact that the output of both
Canadian and United States mills was largely contracted for with
publishers in the United States, and also to the fact that shipping
facilities were lacking and ocean rates and insurance extremely high.
Both France and England are reported to have restricted the quan-
tity of paper imported.
The quantity of news-print paper exported from the United States
and Canada in excess of that required to supply regular contract
customers abroad reduced the supply available for the open market,
and to that extent was a factor in the sharp rise in open-market
prices. The attractive prices offered by foreign buyers, even if they
did not secure paper, also had an important effect upon domestic
prices. When contracts with domestic publishers expired American
manufacturers had the choice of renewing them or of selling the
released tonnage to foreign buyers. The foreign bids, therefore,
proved very effective as a leverage in securing an increase in domestic
prices. Foreign buyers, just as did domestic buyers, sought paper
from all possible sources of supply, which resulted in an accumula-
tion of foreign inquiries at the mills and made the quantity demanded
seem much greater than it really was.
Section 4. Causes of limited supply.
It has already been pointed out that the production of news-print
paper in 1916 did not increase as rapidly as the indicated consump-
tion, while a considerable domestic as well as export demand re-
mained unsatisfied. In spite of the attractive prices offered, the
supply was not sufficient to meet the demand. The principal reason
for this condition was the inadequacy of the existing mill equipment
and the impossibility of installing new equipment immediately.
124 REPORT ON NEWS-PRINT PAPER INDUSTRY.
i The information collected by the Commission indicates that almost
every available machine in the United States and Canada ran 24
hours a day for six days a week throughout the year 1916. Strikes,
breakdowns, fires, and floods diminished the possible output some-
what, but probably to a less extent in 1916 than in 1915. Manufac-
turers state that their mills were speeded up to the limit of their
rapacity. During the spring months of 1916, on account of favor-
able water conditions, a number of domestic mills ran even above
their normal rated capacity, which is estimated to be about 93 per
cent of the maximum capacity. In June, 1916, the average output of
all domestic mills belonging to the News Print Manufacturers' Asso-
ciation was reported as 94.3 per cent of their theoretical maximum
capacity. In the same month Canadian mills attained an average
of 97.7 per cent of their maximum capacity. It thus appears that the
manufacturers, both domestic and Canadian, strove to meet the in-
creasing demand and produced as much paper as their news-print
equipment would permit. A further increase in output therefore
could only have been obtained by building new mills, adding new
machines to existing mills, transferring machines from other grades
to news print, or running one or more shifts on Sunday.
According to information obtained by the Commission, it takes at
least a year to build and install a Fourdrinier .paper machine and to
develop the water power and install the complementary equipment
for making pulp and preparing it in the beater room. Paper ma-
chine manufacturers have stated that in 1916 it took considerably
longer than formerly to construct a modern Fourdrinier machine, on
account of the large amount of business on hand. The cost was also
greater. It was, therefore, impossible to build new mills or install
new machines during the year to meet the sudden increase in demand
for paper. The three new machines that did begin operations in
1916 were in the process of construction when the unusual demand
arose. Two of these belong to the International Paper Co. and one
to a Canadian company, the Donnacona Paper Co.
Two. new mills and several new machines which were also in the
process of construction in 1916 will begin operation in the first half
of 1917. The present high prices and large profits are also leading
to further developments in the industry not previously contemplated.
These will not be available, however, until 1918. (See Ch. II, p. 25.)
The transfer of machines from other grades to news-print paper to
a sufficient extent to meet the increased demand was prevented by the
increase in the prices of other grades of paper and the higher profits
generally obtained from their manufacture and sale. When this
matter of transferring machines was taken up with the executive
committee of the News Print Manufacturers Association by the
Commission the members stated that such a transfer would result in a
sacrifice in profits which they could not afford to make.
SUPPLY AND DEMAND FACTORS. 125
News-print paper manufacturers also stated that Sunday operation
was not possible because of the opposition of the labor unions and
also because of the necessity of making repairs. One small mill in
Wisconsin, however, did succeed in operating on Sunday for several
months.
As heretofore pointed out, the domestic news print industry has
not grown since 1910, and the increased consumption of domestic
publishers has been supplied more and more by Canadian mills. As
a result there was not enough surplus mill capacity in 1916 to meet
the expansion in demand which occurred. The lack of development
shown by the domestic industry is due to a considerable extent to
the higher cost of manufacture and lower profits of most mills as
compared with Canadian mills. The spruce pulp wood most acces-
sible to domestic mills in many cases has already been used up and
present requirements must be met by supplies brought from longer
distances. Some companies are paying freight as high as $4 a cord,
which increases the cost of the wood at the mill fully a third. In
Canada water power is cheaper than in the United States and timber-
lands can be obtained on more favorable terms, so that the trend of
the industry is inevitably in that direction.
Section 5. Prospective supply and demand for 1917.
The relation between supply and demand for 1917 can only be
estimated. Figures furnished the Commission by news print manu-
facturers indicate that the output of mills on the North American
Continent will be approximately as great for 1917 as for the preced-
ing year, since new machines coming in will probably offset the
tonnage lost by the transfer of machines from news print to other
grades as well as by any disturbances that may occur in production.
It is reasonable to assume also that the relation of imports, exports,
and stocks on hand to the total will remain approximately the same
in 1917 as in the preceding year, so that the quantity of paper avail-
able for consumption should be as great. This quantity amounted to
1,816,010 tons in 1916.
In December, 1916, the various newspaper associations were re-
quested by the Commission to furnish estimates of the minimum
requirements of their members for 1917 and the extent to which their
requirements were assured. The data supplied by publishers' asso-
ciations and individual publishers, taken in connection with the data
furnished by manufacturers, indicated that the minimum require-
ments of the papers reporting for 1917 were assured except about
130,000 tons. These estimates did not include the requirements of a
large number of small papers that did not belong to associations and
did not report to the Commission, but the aggregate quantity of
paper used by such publishers is small.
126 REPORT ON NEWS-PRINT PAPER INDUSTRY.
The reports of news print manufacturers in the United States
made at the same time indicated that after fulfilling their contracts
and after taking care of those customers that they felt under moral
obligations to supply with paper during the first half of 1917, they
would have left about 50,000 tons of free paper, if their machines
continued to produce at the same rate as in 1916. In addition to this
quantity there was some free paper available from Canadian mills.
On this basis there would have been at least 100,000 tons of free paper
available for the whole year. But subsequent information indicates
that because of car shortage and other abnormal conditions the news-
print mills will not be able to equal their 1916 record, so that the sur-
plus of free paper will probably be somewhat less than 100,000 tons.
The contract and moral obligations reported by domestic manu-
facturers, however, included a considerable quantity of paper that
was to be supplied to jobbers, and it is safe to assume that a consid-
erable portion of this is free tonnage and would be available to those
publishers who are dependent upon the open market. These facts
with respect to the commitments and free tonnage of manufacturers
and the requirements of publishers support the conclusion that the
supply during 1917 will probably be sufficient to meet the minimum
requirements of consumers, if they economize in every way possible.
The balance between consumption and production, however, is very
close, and present abnormal conditions are constantly putting
added pressure upon publishers to increase their circulation, so that
there is little prospect of a substantial improvement in market condi-
tions during the continuance of the war.
Section 6. Conclusions.
The facts stated on the preceding pages indicate that there was a
scarcity of news print paper in 1916. A small increase in domestic
production is shown ; but there was a large increase in demand, both
domestic and foreign, and imports were not sufficient to meet this
increase. As a result stocks were materially reduced.
This scarcity, however, was undoubtedly exaggerated by articles
published in trade papers and by the emphasis given it by the manu-
facturers through their association and by the jobbers. This resulted
in an abnormal multiplication of orders caused by panic conditions
thus partly brought about. The result was a bidding up of prices,
giving the appearance of a much greater demand than actually
existed.
All the data in the Commission's possession indicate that there will
probably be enough paper to meet the minimum needs during 1917,
if publishers will practice economy in every way possible. The
effect of the war conditions now existing will probably be to stim-
ulate demand and reduce the supply.
CHAPTER VII.
EVIDENCE OF VIOLATIONS OF THE ANTITRUST IAWS.
Section 1. The News-Print Manufacturers Association. Ttah wl
Substantial evidence is in the possession of the Commission tending
to show violations of the Federal antitrust laws by certain manuf ac- ' ^-Of>\
turers of news-print paper who are members of the voluntary asso-
ciation known as the News Print Manufacturers Association, with 4 ^S
headquarters at 18 East Forty-first Street, New York City. Its
membership includes practically all of the Canadian manufacturers
as well as all the United States producers except one large and a few
smaller ones. About 86 per cent of the effective production 1 of
news-print paper of the North American Continent is included in
the association. The five members of the executive committee of
the association, who, with the secretary, manage its affairs, speak
directly for more than one-third of the total news-print tonnage
of the continent. Mr. George F. Steele, of New York, the secretary
of the association, is its admitted active central agent. 2
The organization has no articles of association and no by-laws.
Its expenses are defrayed by assessments of members on the basis
of tonnage output. Neither it nor its executive committee keeps any
written minutes or records. Meetings of the executive committee
and of the association are held at the call of the secretary, and
usually in turn at New York, Montreal, and Chicago. Policies are
decided upon at the various meetings or through correspondence
Between the secretary and different members. As a rule they are put
into effect on notification by the secretary. The secretary, by fre-
quent use of the telephone, also keeps in close touch with each of
the members of the executive committee, as well as with certain
distributing agencies and other persons prominent in the industry.
Ostensibly the association is organized for the collection and dis- \
semination of statistics. Actually, however, its principal energies ;
have been diverted to other activities. The evidence in the hands
of the Commission (consisting largely of correspondence between
the active parties and of interviews) tends to show that the acts
1 Effective production refers to that part of news-print paper in the market for pub-
lishers. It does not include some news print controlled by publishers and some which
is used in the production of wall paper. In 1916, 82 per cent of the total production on
the North American Continent was produced by members of the association.
* For further details in regard to the association, see Chap. II, sec. 5.
127
128 REPORT ON NEWS-PRINT PAPER INDUSTRY.
of the association officers and members have transcended innocent
purposes and resulted in substantial suppression of competition and
restraint of trade. ^ VW. U *
Section 2. Allotment of customers.
Competition in the selling of news-print paper in both the United
States and Canada has been prevented by the allotment of custom-
ers or by the noninterference by association members with the
customers of any other member.
These efforts to control constitute one factor in the present situa-
tion. Writing to a manufacturer under date of March 17, 1916,
the secretary of the association says (after referring to the dis-
parity of costs between what he calls the larger and smaller mills,
which latter are compelled to purchase their sulphite) :
If the prices were put up to a point sufficient to protect them,
the profits made by these larger concerns would be simply
astounding. On the other hand, what are the smaller mills
going to do if the price of paper does not go up ?
*******
There seems to be only one way out of the difficulty for them,
and that is for the larger mills to take the contracts and those
smaller mills to depend on current business until the war is
over and then bring about a readjustment of contracts. There
is good reason why this current business should pay a high
price, and it seems to me that it should be turned over to the
mills who do not supply their own raw material and will have
to pay well for their chemical pulp.
*******
This is a matter which will be discussed fully at the meeting
next Thursday and Friday in Montreal, and I am going to try
to bring about an arrangement of that sort for the production
of the smaller concerns. t
It was elicited at the recent hearings before the Commission that
such allotment of customers and business exists in the present
organization of the trade.
As a result, and as the evidence shows, except where news-print
mills have ceased to make news-print paper and have thus left their
customers in the open market, or where occasionally a mill not in
the association has made a lower price to obtain a needed customer
there have been very few instances of competition in selling in the
news-print paper industry. In fact, so few are these cases that each
is known and referred to by name in the trade. Such instances of
competition of any size as did occur were either arbitrated or apolo-
gized for and promises of nonrepetition demanded and made.
The effect of these practices appears to be the undue enhance-
ment of prices to small publishers and a widening of the disparity
in prices charged the customers of different mills.
:
EVIDENCE OF VIOLATIONS OF THE ANTITKUST LAWS. 129
Section 3. Prorating and absorbing tonnage of new mills.
By the surrender pro rata of customers to absorb the tonnage of
new mills as it comes on the market, such new competitors have been
prevented from selling any paper in open competition.
The power of the association entirely to suppress the threatened
competition of new mills has been exercised in at least three instances.
The Price Bros.' mill and the Abitibi mill, of Canada, are both large,
new, and efficient mills and therefore potentially powerful com-
petitors. The customers required by them, in order to keep their
production off the competitive market, were surrendered to them pro
rata by members of the association, so that substantially no tonnage
therefrom came into the market as competitive. Successful efforts
were made to prevent competition from the tonnage of the Union
Bag & Paper Co.'s new news print mill at Three Rivers, Quebec. Its
tonnage is to be sold through the Canadian Export Paper Co. (See
p. 42.)
It is apparent that there is no necessity for any price agreement
under any scheme of allotment either of customers or of territory
among the various producing units when such division of business is
respected. Each producer is then at liberty to charge his customers
whatever the traffic will bear without the restraining influence of
competition. Particularly are such schemes effective when, as in
the present situation, all over-seas importation of paper is cut off.
Section 4. Curtailment of production.
In 1915 the association attempted the curtailment of the produc-
tion of those engaged in the manufacture of news-print paper. It
lias also endeavored to prevent existing producers from increasing
their facilities for production.
On the latter point, although the secretary, at a meeting in Mon-
treal in October, 1915, stated that
We were on the verge of a revival of business such as has
rarely before been experienced in this country.
and that
I stated to those who were assembled at the Montreal meeting
that it appeared to me as if prosperity was knocking at our
door,
yet, notwithstanding such knowledge or prediction, efforts were con-
tinued throughout that month to prevent one company from putting
in a new machine for the manufacture of news print, even to the
extent of attempting to buy certain water power, " so as to stall his
plans of putting a paper mill in there 'Wthis is the language of the
person who made the attempt.
) 17 9
130 REPORT ON NEWS-PRINT PAPER INDUSTRY.
Section 5. Canadian joint selling agency.
On August 15, 1916, a charter was granted to the Canadian Export
Paper Co., of Montreal, with an authorized capital stock of $500,000.
The form of contract for subscription to stock in that company shows
that each paper-manufacturing company, by subscribing thereto,
agrees to place in the hands of the Canadian Export Paper Co. the
sale of all of its news-print paper tonnage (except that sold in Can-
ada) and that the proceeds of such sales should be prorated among
the constituent concerns.
Five Canadian concerns The Laurentide Co., Price Bros., Belgo-
Canadian, Donnacona, and Brompton Pulp & Paper Co. are
members of this export company. It is expected that other Canadian
mills will become members or put their tonnage at its disposal, and
the export company will sell " as though it were the product of one
concern " the total export tonnage of its constituent members or
principals, all of whom are normal competitors, and whose aggre-
gate output comprises more than one-third of all the news-print
paper produced in Canada. In 1915 about 75 per cent and in 1916
about 77 per cent of the total Canadian output was imported into
v the United States. (See Chap. II, sec. 7.)
The sales agents of the Export Paper Co. have already been active
^ in the United States. Through this joint agency that competition,
if any, which previously may have existed or which might now
normally exist between the" member concerns in bidding for trade
in the United States has been entirely suppressed.
It should be stated in this connection that the correspondence
shows that the secretary of the association urged the formation of
this company and that the constituent companies are also members
of the News Print Manufacturers Association, and that the Lauren-
7
tide company is represented on the executive committee of the asso-
ciation. The possible results of the control of one-third of the total
\>/ (CSnadian tonnage through the executive committee of the News
Print Manufacturers Association in diverting such supplies from
the United States and artificially starving the domestic market can
easily be appreciated.
Section 6. Other activities.
Substantial evidence of other activities tending to restraint of
trade or in aid or furtherance of such restraint is also in the hands
of the Commission. This evidence may be summarized as follows:
(a) Two campaigns among the news-print manufacturers were
prosecuted through the secretary of the News Print Manufacturers
Association, urging that such manufacturers take steps to show gen-
eral and large increases in costs as a justification for proposed sharp
EVIDENCE OF VIOLATIONS OF THE ANTITRUST LAWS. 131
advance in prices. The first campaign, in the winter of 1915-16,
apparently failed to make the desired showing. A number of mills
answered that there had been no particular increase in costs or that
if slight increases had occurred they had been offset by certain sav-
ings. The second campaign occurred in May and June, 1916. It
was then emphatically impressed upon the mills that in their cost
statements all materials used should, regardless of actual costs, be
figured as though bought in the current open market, when such
was not the case.
(b) Substantially all paper sold to publishers is sold on the con-
dition that it be used only by the purchaser. This practice results
in closer control of the supply of paper and prevents any accumula-
tion of stocks which might be offered in competition with the supply
from the mills.
(<?) Some mills, which buy pulp wood, have made and generally
respect a division of territory and do not bid against each other in
the purchase of such wood.
(d ) The business of most of the smaller publishers is now divided
among jobbers and distributing agencies. Indications are that in
certain States or sections the smaller publishers are unable to obtain
quotations except from the specific jobbers to whom their district is
apparently assigned. The fact that, as a rule, mills will not quote to
these smaller publishers also indicates close relationship between
mills and distributing agencies in such division of territory.
CHAPTER VIII.
SUMMARY OF PRINCIPAL FACTS WITH CONCLUSIONS AND RECOM-
MENDATIONS.
Section 1. Principal facts.
News-print paper is produced in North America by approxi-
mately 80 manufacturing plants, of which, in 1916, 63 were located
in the United States and IT in Canada. Approximately 75 per cent
of the Canadian production is consumed in the United States.
The costs of producing news-print paper depend upon varying
factors, to wit, the size and integration of the plant, its access to
supplies of wood, the character and cost of its water power, and the
efficiency of equipment and management. The large mills, which
generally are the most efficient, usually make contracts for their
entire output for a year in advance with the large metropolitan
papers for the bulk of their tonnage. Some large contracts have
been made for periods of from three to five years. The smaller mills,
and those which are operating at higher costs, usually supply the
smaller publishers and sell a larger proportion of their output in the
open market, through jobbers, at higher prices.
COSTS or PRODUCTION. For the first six months of the year 1916
average costs had not increased over the last half of the year pre-
ceding. For the next four months, up to October 1, 1916, the aver-
age increase of costs in the chief American mills was about $1.50
per ton. By December of 1916 and January of 1917 average costs
in these mills had increased $5.52 per ton over the costs of the first
six months of 1916, the increase in particular mills ranging from $1
to $19 per ton. It has been estimated that the average advance for
the first half of 1917 would be between $5 and $10 per ton. Informal
estimates made by the officials of the Canadian Government placed
the maximum increase in cost of production at $10 per ton for Ca-
nadian mills, and prices were agreed upon with the Canadian Gov-
ernment by which publishers were furnished with news-print paper
at the following prices : $2.50 per 100 pounds for rolls and $3.25 for
sheets in car lots and $3.50 per 100 pounds for sheets in less-than-car
lots. These prices are subject to revision after June 1, 1917.
PRESENT CONDITIONS SERIOUS. Conditions in the newspaper pub-
lishing business were reported by the Commission in March as serious
132
FACTS WITH CONCLUSIONS AND RECOMMENDATIONS. 133
and they continue to be serious. Within the year prices to large con-
sumers of print paper have been advanced from about $40 per ton
to over $60 and $70 per ton, and in some cases even up to $90 per ton.
Also, by concerted action the terms of contracts have been so changed
as to shift a considerable financial burden from the manufacturers
to the publishers.' To some of the larger newspapers of the country
this price increase means, in some instances, an increase in paper cost
of hundreds of thousands of dollars. This, in many cases, will not
only cause the loss of profits for the year ? but a serious financial em-
barrassment of the publication itself.
The smaller publishers have been forced to pay prices as high as
$150 and $180 per ton. In addition to the above increase of prices
among publishers of minor dailies and weeklies, it is complained that
they found great difficulty in getting paper at any price, and to a
large number of such publishers in the country the increase in the
price means the difference between a living margin and the complete
ruin of their business and the suspension of their publications.
The financial strength of great daily publications may enable them
to survive ; it is the smaller newspapers that will probably suffer the
most seriously if these conditions continue. The small weekly and
daily publications of the country particularly serve a great and
useful purpose in the dissemination of facts and in the creation of
an intelligent public opinion, and such disaster as impends by reason
of this increase in the price of news-print paper makes the question
one of great public concern.
CAUSES OF EXISTING CONDITIONS. The existing situation is partly
due to conditions of supply and demand. On account of the increase
in advertising and news matter, there has been an increase in the
demand for news-print paper. The supply of news-print paper
available for domestic consumption increased from 1,644,000 tons in
1915 to 1,816,000 tons in 1916, an increase of 172,000 tons for the year
1916 over the year 1915. On January 1, 1916, the stocks of news-
print paper carried by manufacturers were about 69,000 tons. At the
end of 1916 these stocks were reduced to approximately 42,000 tons.
While during 1916 prices advanced to an extraordinarily high level
and there were difficulties in procuring paper, it is nevertheless a
fact that newspapers were generally able to secure news-print paper
for their reasonable requirements if they would pay very high prices.
The quantity manufactured during the year was equal, therefore,
to that needed for reasonable requirements of newspapers within
approximately 27,000 tons, which quantity was taken from the re-
serve stocks. It is probable that if publishers will exercise the
strictest economy the supply will be equal to the requirements for
the year 1917.
134 REPORT ON NEWS-PRINT PAPER INDUSTRY.
The close balance between supply and demand inevitably tended
to create general uneasiness. There is much evidence that manu-
facturers, instead of attempting to allay this natural fear on the
part of the publishers, played upon it deliberately. A panic market
was the result. While there was approximately enough paper to go
around, publishers were fearful that they could not get their supply.
They tried to place orders with many mills and duplicated the plac-
ing of their orders for the purpose of being assured of a supply.
Newspapers which had difficulty in closing contracts or which were
fearful lest their supply under contract would prove inadequate went
into the open market. The result was that requirements were made
to appear many times greater than they actually were, and a fic-
titious demand was thus created, which produced a condition of
panic with panic prices.
While these conditions obtained and would naturally have some
influence upon price, it is the opinion of the Commission that the
prices were actually made in the industry without the operation of
free competitive influences in their determination. By means of a
trade association, organized ostensibly for a lawful purpose, condi-
tions in the market were substantially influenced in a manner which
would not be possible under conditions of free competition. Concert
of action was made possible through this association in the matter
of discouraging new production of news-print paper, in the allotment
of customers, in the promotion of fear that the supply would not be
equal to the demand, in disseminating propaganda justifying higher
prices because of alleged higher costs, and in other ways. The in-
crease in the prices charged are not justified by the increased costs of
production.
Section 2. Conclusions.
From the facts disclosed during the investigation, the Commission
submits the following conclusions :
1. The increases in the selling prices of news-print paper for the
year 1917 in most cases were greater than could be justified by the
increases in cost.
2. There is not now, and has not been, such a serious shortage of
news-print paper as to warrant the extremely high prices generally
charged. The Commission finds that there is enough news-print
paper to meet all the strictly necessary demands of publishers during
1917. There is, however, a close balance between supply and demand,
so that the strictest economy in the use of news-print paper is neces-
sary.
8. The system of distribution of news-print paper is faulty. By
reason of this fact this close balance between supply and demand
could easily be developed into local shortage, and this condition was
taken advantage of and exaggerated by artificial means. Reports of
FACTS WITH CONCLUSIONS AND RECOMMENDATIONS. 135
alleged shortage were widely circulated for the purpose of justifying
high prices. Keen competition among the comparatively unorganized
publishers, who, in their anxiety to assure themselves of their neces-
sary supplies of paper, bid feverishly in the open market, helped to
make the situation more acute.
4. The increase in prices has been due in parfc to the fact that
free competition has been seriously restricted in the news-print paper
industry. Important manufacturers in the United States and Canada
were banded together to secure unreasonable profits.
5. Some small publishers have already been put out of business
and more are likely to suffer the same fate, and some large publishers
will be financially ruined and many others will be unable to make any
profits unless conditions are remedied.
6. While jobbers have been severely criticized in respect to the
prices charged by them, the Commission has found many instances in
which the mills have compelled the jobbers to pay exceedingly high
prices, and in those instances it has been necessary for the jobbers in
turn to charge extremely high prices to their customers. In some
instances, however, it was found that jobbers who bought paper at
reasonably 'low prices took advantage of their opportunity to sell at
unreasonably high prices.
Section 3. Efforts of the Commission to afford relief.
The Commission, while directing its efforts to a discovery of the
facts affecting the economic and legal sides of the question, sought
also, within the limitations of its power, to restore competitive con-
ditions in the industry and at the same time to bring such immediate
practical relief as would prevent serious financial distress and injury
to publishers while the processes of competition were being restored.
Public hearings were held, at which these several interests appeared,
and many conferences were had with them. The efforts of the Com-
mission were made in the public interest, but some of them without
express authority of law. Its aim was to act as arbiter in the
situation for the purpose of securing prompt relief. It was par-
ticularly desired to provide some means whereby the smaller publish-
ers could be relieved with respect to their most pressing necessities.
The various interested parties, however, failed to come to any agree-
ment among themselves. But, largely as a result of the Commission's
activities, some substantial relief was obtained for smaller publishers
in various sections of the country through the cooperation of certain
manufacturers, jobbers, and publishers.
PROPOSAL OF MANUFACTURERS. Following the activities of the
Commission, certain manufacturers producing in the aggregate about
one-third of the total tonnage of news-print paper in the United
136 REPORT ON NEWS-PRINT PAPER INDUSTRY.
States and Canada submitted the following proposal to the Com-
mission :
Whereas among manufacturers and publishers there are differences of opinion
regarding the increase since January, 1916, in the cost of production of news-
print paper in the United States, and regarding the increased prices to which
manufacturers are entitled for news-print paper sold for use in the United
States for the six months' period beginning March 1, 1917, taking into con-
sideration the increase in their cost of production and other conditions affect-
ing such manufacturers ; and
Whereas the undersigned manufacturers are desirous of cooperating in any
plan that may be approved by the Federal Trade Commission providing for a
more effectire distribution of news-print paper among the smaller publishers ;
and
Whereas the undersigned manufacturers are desirous of submitting these mat-
ters to the arbitrament of the Federal Trade Commission :
Now, therefore, Each of the undersigned does hereby request the Federal
Trade Commission to find, fix, and determine forthwith
(a) The probable or estimated increased cost of production of standard news-
print paper in the United States during the period of time commencing March 1,
1917, and ending September 1, 1917, over the cost of production of news-print
paper in the United States during the year 1916.
(b) What price per hundred pounds at the mill would be a fair and reason-
able price for the sale of such paper for use in the United States during the
aforesaid period of time from March 1, 1917, to September 1, 1917, taking into
consideration such increased cost of production and other conditions affecting
respective manufacturers which the Commission may deem pertinent at this
time?
And each of the undersigned does hereby agree that it will carry out and
complete at the prices and on the terms therein stated all of its existing con-
tracts for the sale of such paper which were made at a price or prices as low
as or lower than the price or prices so found, fixed, or determined by said
Commission to be fair and reasonable for said period commencing March 1,
1917, and ending September 1, 1917, and that with respect to contracts which
are for higher prices than those so found, fixed, and determined by said Com-
mission for said last-mentioned period of time it will supply such contract
purchasers with their necessary requirements only of such paper at a price not
in excess of the amount so found, fixed, or determined by the Federal Trade
Commission to be a fair and reasonable maximum price on such paper, as
aforesaid, during said period of time from March 1, 1917, to September 1, 1917.
The purpose of limiting such last-mentioned contract purchasers to an
amount of paper which will supply their necessary requirements only is to
enable each of the undersigned to supply other, and particularly small, pub-
lishers who have no contracts with sufficient paper to cover their necessary
requirements from time to time during said period of time ; and consequently
in the event that any dispute arises at any time between any undersigned
manufacturer and such contract purchaser, or that any complaint is made to
the Federal Trade Commission at any time concerning the question as to
whether or not such contract purchaser is getting more than his necessary
requirements only of paper during said period of time, then, and in that event,
the Federal Trade Commission shall have the right, and is hereby authorized,
to determine in each of said instances the amount of paper which is needed
to supply the necessary requirements only of such contract purchaser, and the
PACTS WITH CONCLUSIONS AND RECOMMENDATIONS. 137
latter shall not be entitled to receive any reduction from his contract price for
any paper during said period unless he has filed with this Commission his
written consent to this arbitration and its terms.
And each of the undersigned does hereby agree that it will, so far as lies in
its power, limit each contract purchaser to his necessary requirements only
and sell to its customers, respectively, who have no contracts sufficient paper
to meet their necessary requirements only during said period of time at a price
not in excess of the amount found, fixed, and determined by the Federal Trade
Commission to be a fair and reasonable maximum price on such paper.
While this arrangement is to run for only six months, it is understood that
the contract prices named in contracts with publishers heretofore made which
may be reduced by the action of the commission hereinunder are not here-
after to determine the price to be paid for news-print paper by such contract
purchasers as consent to this arbitration.
And the undersigned does also agree and bind itself to cooperate with the
Federal Trade Commission in carrying out any plan approved by the Com-
mission to bring about the distribution of news-print paper for the purpose
of securing prompt and effective relief to the small publishers of the United
States and which will enable such small publishers, through cooperative buy-
ing, to secure their news-print paper at practically the same price as that
which is hereinunder to be enjoyed by the larger publishers, due provision
being made for any additional cost of distribution. New publishers shall not
be charged more than said maximum price so found, fixed, and determined
by the Federal Trade Commission during said period of time.
And each of the undersigned, while not admitting but on the contrary
expressly denying that any law has been violated by it, does nevertheless
hereby agree that the Federal Trade Commission may, if it finds it necessary
or advisable, proceed forthwith to make recommendations for the readjust-
ment of its business in order that it may maintain its organization, manage-
ment, and conduct of business in accordance with law.
Respectfully yours,
INTERNATIONAL PAPEE Co.,
By P. T. DODGE, President.
ABITIBI POWER & PAPER Co. (LTD.),
By ALEXANDER SMITH, Vice President.
THE SPANISH RIVER PULP & PAPER MILLS (LTD.),
By GEO. H. MEAD, President.
THE LAURENTIDE Co. (LTD.),
By GEORGE CHAHOON, Jr., President.
THE BELGO-CANADIAN PULP & PAPER Co.,
By W. H. BIERMAN, General Manager.
THE NORTHWEST PAPER Co.,
By C. I. MCNAIR, General Manager.
TAGGARTS PAPER Co.,
By G. C. SHERMAN, President.
FEBRUARY 15, 1917.
To the FEDERAL TRADE COMMISSION,
Washington, D. C.
ACTION or PUBLISHERS. When the proposal of the manufacturers
was made known to newspaper publishers a number of the
larger of them agreed that if .the price in their contracts made for \
the purchase of paper should be reduced to the maximum price to be
138 REPORT ON NEWS-PRINT PAPER INDUSTRY.
determined by the Commission for the period of six months from
March 1, 1917, they would release each month up to 5 per cent of
their tonnage under contract, it being understood that such released
paper would be used in the manner to be determined by the Commis-
sion to help publishers without contracts.
ACTION or JOBBERS. As the needs of the smaller publishers,
widely scattered throughout the country, were most urgent, and
since they were largely dependent upon the paper jobbers for their
supplies, and as such jobbers appeared to be the only mean| at hand
for supplying these small publishers promptly, the Commission
deemed it advisable to call the jobbers for a conference. The result
was that the leading jobbers entered into an agreement to handle
and distribute such news-print paper as the Commission might place
at their disposal at fair and reasonable maximum rates of com-
pensation as follows:
Single car lots direct from mill, not to exceed 5 per cent on f. o. b. mill
price.
Less than carload lots, but not less than ton lots, delivered from ware-
house, not to exceed 12$ per cent on cost in warehouse.
Less than ton lots, delivered from warehouse, not to exceed 20 per cent on
cost in warehouse.
The agreement also provided that the jobbers during the period
covered by it would handle all their news-print tonnage sold to
publishers on the above rates of gross profit figured on current re-
placement value, and also that they would sell for cash or on ap-
proved credit in carload lots to the representative of any associa-
tion of publishers at the same prices as to individuals.
FINDINGS OF THE COMMISSION AS TO FAIR PRICES. Two specific phases
of relief were presented in the proposal of the manufacturers set
out above, (1) the matter of price reduction directly effecting the
saving of millions to publishers, and (2) a more equitable distribu-
tion of paper supply directly benefiting the smaller publishers, not
only saving them money, but preserving many of them from suspen-
sion and bankruptcy.
The second phase, that relating to the distribution of paper to
the smaller publishers, while requiring a relatively small quantity
of paper, was the most difficult of accomplishment. It was hoped
that this paper would be obtained in part by the proposal of the
larger publishers indicated above.
The proposal of the manufacturers and the action of jobbers and
publishers having been defined, the Commission decided to accept the
difficult task of arbiter. In so doing it did not purport to act as an
agency of government to fix prices, but, on the contrary, to serve
only as an arbitrator.
FACTS WITH CONCLUSIONS AND RECOMMENDATIONS. 139
The Commission's findings were as follows :
(1) That a fair and reasonable price for the sale of standard news-print paper in
rolls by each of the aforesaid signatory manufacturers for use in the United
States during the six months' period of time beginning March 1, 1917, and end-
ing August 31, 1917, is the sum of $2.50 per 100 pounds f. o. b. at the mill in
carload lots and is the sum of $2.75 per 100 pounds f. o. b. at the mill in less-
than-carload lots.
(2) That a fair and reasonable price for the sale of standard news-print
paper in sheets by each of the aforesaid signatory manufacturers for use in
the United States during the aforesaid six months' period of time is the sum
of $3.25 per 100 pounds f. o. b. at the mill in carload lots and is the sum of
$3.50 per 100 pounds f. o. b. at the mill in less-than-carload lots.
(3) That no publisher or jobber who has an existing contract with any of
the aforesaid signatory manufacturers for standard news-print paper at a
higher price or prices than is hereby found to be fair and reasonable shall be
entitled to receive or be given the benefit of such reduced prices unless he
files with this Commission prior to March 20, 1917, his written agreement to
waive and release for sale and distribution to publishers only, who have no
contracts, 5 per cent of the total amount of tonnage specified in such contract.
(4) That if any extraordinary new conditions hereafter arise which make it
unjust to the aforesaid signatory manufacturers to continue the aforesaid prices
during the full period of said six months, this Commission will readjust the
same for the whole or any remaining part of the three months commencing
June 1 and ending August 31, 1917 ; provided that said signatory manufacturers
file with this Commission their written request so to do ; and provided further
that, in the opinion of this Commission, the facts presented in such petition re-
quires such action in order to prevent plain injustice.
In making this award the Commission stated that it was of the
opinion that the foregoing prices for news-print paper would not
produce a fair and reasonable profit for some of the smaller mills
under the unusual conditions now existing as to the cost of ground
wood and sulphite. They produce not over 18 per cent of the tonnage
of the North American Continent.
Further, it was of the opinion that on the basis of their respective
costs of production, the foregoing prices were also fair and reason-
able for each and all of the following manufacturers who did not
join in this proposal :
Minnesota & Ontario Power Co., Pejepscot Paper Co.
including its subsidiary, the Crown Willamette Paper Co.
Fort Frances Pulp & Paper St. Croix Paper Co.
Co. (Ltd.). Price Bros. & Co. (Ltd.)
Gould Paper Co. Donnacona Paper Co. (Ltd.)
Finch, Pruyn & Co. Powell River Co.
Great Northern Paper Co.
In addition to the above companies, the Consolidated Water Power
& Paper Co. and the Wisconsin River Pulp & Paper Co. could sell at
a slight advance over the prices named and make a fair profit. It
should also be stated that the Great Northern Paper Co., appearing
140 REPORT ON NEWS-PRINT PAPER INDUSTRY.
v ^?in the above list, is and has been selling most of its output at prices
; Sas low or lower than those named; and it should be further stated
that the Powell Eiver Co. and the Crown Willamette Paper Co have
much tonnage under long-time contracts at lower prices.
As soon as this award was announced a majority of the contract
customers of the signatory manufacturers signed the agreement
with the Commission to release 5 per cent of their tonnage and to
eliminate returns. Some of the customers of the International
Paper Co. found it impossible to sign this agreement, because they
had already been reduced in thejr tonnage from 10 to 20 per cent
below what they consumed during the preceding year. Other cus-
tomers of the International Paper Co. refrained from signing the
agreement fearing that it would cancel their contracts and leave
them in the open market at the end of the period covered by the ar-
bitration. This fear was incited in some instances by the activities
of the International's sales agents.
In order to reach a satisfactory settlement of this and other doubt-
ful matters connected with the arbitration, negotiations were con-
tinued with the signatory manufacturers during the month of March,
1917. Efforts were also made during this period to induce several
other large manufacturers to join in the agreement. Before these
matters were disposed of the Commission was notified by the Depart-
ment of Justice that it intended to continue proceedings against the
news-print manufacturers.
On April 11, 1917, the Federal grand jury for the southern dis-
trict of New York brought indictments against the following news-
print manufacturers for violation of the Sherman law :
Philip T. Dodge, International Paper Co.
George H. Mead, Spanish River Pulp & Paper Mills (Ltd.).
Alexander Smith, Abitibi Power & Paper Co.
George Chahoon, jr., Laurentide Co.
G. H. P. Gould, Gould and Donnacona Paper Cos.
E. W. Backus, Minnesota & Ontario Paper Co.
Frank J. Sensenbrenner, Kimberly-Clark Co.
The first four of the indicted manufacturers were signatories to the
arbitration agreement.
Having heard nothing from these manufacturers after the in-
dictments were brought, the Commission on April 21. 1917, sent them
a list of their contract customers who had signed up and requested
them to state what means they had taken to give these publishers the
benefits of the arbitration agreement, and what disposition thev were
FACTS WITH CONCLUSIONS AND RECOMMENDATIONS. 141
prepared to make of the 5 per cent of contract tonnage of paper sur-
rendered by these publishers.
To this letter the manufacturers replied that in view of the in-
dictments, which were unexpected when the agreement was entered
into, they desired to give the matter further consideration. During
the last week of May, 1917, counsel for two of the indicted manu-
facturers notified the Commission that his clients had decided to
withdraw from the arbitration submission of February 15, 1
Section 4. Recommendation.
The withdrawal of the largest manufacturers from the arbitration
arrangement resulted in the failure of the effort of the Commission
to bring relief to the situation by voluntary cooperation of the inter-
ested parties. It, therefore, has decided to recommend as a war emer-
gency measure that Congress by appropriate legislation provide:
(1) That all mills producing and all agencies distributing print
paper and mechanical and chemical pulp in the United States be op-
erated on Government account; that these products be pooled in the
hands of a Government agency and equitably distributed at a price
based upon the cost of production and distribution, plus a fair profit
per ton.
(2) That pursuant thereto some Federal agency be empowered and
directed to assume the supervision and control thereof during the
pendency of the war.
(3) That, by reason of the fact that approximately 75 per cent of
the production of news-print paper in Canada comes into the United
States, proper action be taken to secure the cooperation of the Cana-
dian Government in the creation of a similar governmental agency
for the same function, which shall be clothed with power and au-
thority to act jointly with the governmental agency of the United
States for the protection of the consumers and manufacturers of print
paper and the public of the United States and Canada.
(4) That in case the Canadian Government shall not join in such a
cooperative enterprise, then importation of paper and mechanical
and chemical pulp into the United States shall be made only on Gov-
ernment account to or through the Federal agency charged with such
supervision and distribution.
EXHIBITS.
EXHIBIT 1.
PETITION OF THE NEWS PRINT MANUFACTURERS ASSOCIATION
TO THE FEDERAL TRADE COMMISSION.
IN THE MATTER OF THE OWEN RESOLUTION RESPECTING PRINT PAPER.
To the Honorable, Federal Trade Commission of the United States of America :
Your petitioner, the Executive Committee of the News Print Manufacturers
Association, respectfully represents:
1. That the News Print Manufacturers Association is an organization formed
by a number of manufacturers of news-print paper in the United States and
Canada for the purpose of promoting the interest of the print paper industry
in said countries.
2. The attention of the undersigned has been called to the fact that a number
of resolutions have been introduced into the Congress of the United States urg-
ing that an investigation be made by this Commission with a view of deter-
mining the reason for the alleged increase to the publishers in the United States
of the cost of print paper ; and that Mr. Owen submitted the following resolu-
tion which was considered and agreed to:
[64th Cong., 1st sess. ; S. Res. 177 ; In the Senate of the United States ; Apr. 24, 1916.]
Mr. Owen submitted the following resolution; which was considered and
agreed to.
RESOLUTION.
Resolved, That the Trade Commission is hereby requested to inquire into
the increase of the price of print paper during the last year and ascertain
whether or not the newspapers of the United States are being subjected to
unfair practices in the sale of print paper.
3. That the undersigned manufacturers of print paper who manufacture
approximately fifty (50%) per cent of the total tonnage of print paper used
in the United States, respectfully represents to your Honorable Commission:
(a) That about eighty-five per cent of the news-print paper manufactured
in the United States and Canada is sold on annual contracts and these contract
prices have not increased more than one per cent during the past twelve
months, and will not average any higher than the price at which it was con-
tracted and sold during the past ten years, whereas the price of book and
wrapping paper have increased approximately one hundred per cent.
(b) That because of adverse newspaper comment in news items and inter-
views in the public press the undersigned as manufacturers of print paper have
been grossly misrepresented.
And respectfully request your Honorable Commission that as soon as it can
be done an investigation be had by your body into this question in accordance
142
EXHIBITS. 143
with the Senate resolution above set forth; and these petitioners respectfully
state that they will consider it a privilege to furnish this Commission any in-
formation within their power.
Respectfully submitted.
NEWS PRINT MANUFACTURERS ASSOCIATION,
PHILIP C. DODGE,
GEOBGE H. MEAD,
J. H. A. ACER,
E. W. BACKUS,
G. H. P. GOULD,
Executive Committee.
By TIMOTHY T. ANSBERRY,
Counsel.
EXHIBIT 2.
THE FEDERAL TRADE COMMISSION'S SUGGESTION OF SMALLER
SUNDAY PAPERS.
The letter below was sent to all Sunday newspapers in the United States :
OCTOBER 14, 1916.
DEAR SIR: In connection with its investigation of news print prices, the
Commission has given serious consideration to possible means of prevent-
ing the suspension of papers because of the increasing scarcity and ad-
vancing prices. The present situation can only be alleviated by increasing
the output or reducing consumption. The Commission has conferred with
a number of prominent publishers regarding ways to reduce consumption
in addition to the cutting off of returns, eliminating wastes, etc., which
many newspapers are reported to have already done. These publishers are
of the opinion that there is still an opportunity to effect a considerable
reduction in consumption by cutting down the size of Sunday papers. They
feel that the elimination of certain features would meet with public ap-
proval and would not decrease the revenues of the publishers. The paper
saved by cutting down the size of one large Sunday edition several pages
would be sufficient to keep a number of smaller papers supplied for a con-
siderable time. Unless present supplies of paper can be increased, which
does not now seem probable, such unselfish action on the part of the large
city papers appears to be the only means that will save many of the
smaller publishers from going out of business.
The Commission asks your cooperation in this matter and would like to
know your attitude toward this proposition. The Commission would also
appreciate any suggestions that occur to you regarding practical ways of
making this proposal effective.
A franked envelope, which requires no postage, is enclosed for your reply.
Very truly yours,
EDWARD N. HURLEY,
Chairman.
Answers to this letter were received from more than 100 publishers. The
purport of these answers has been summarized below. In order to measure
their significance more accurately they have been classified according to cir-
culation.
The Chicago Tribune, whose Sunday edition has a circulation of over
600,000, had noticed a detriment to its business from a cut of four pages in
the Sunday color section, and did " not feel warranted in making a further cut
in the Sunday paper."
144 KEPORT ON NEWS-PRINT PAPER INDUSTRY.
The Boston Post, which has a circulation of over 450,000, answered, in part,
as follows :
We have also materially reduced the size of our issues, using two pages
less several days per week than we would use if there were an unlimited
supply of news print. We are prepared to go even further than this in
cooperation with other papers, and would willingly omit one edition each
week. That is a move, however, so radical that it could not be accomplished
without a general agreement.
A publishing company in the Middle West, whose dailies in different cities
have a combined circulation of over 200,000, reported lack of success in an
attempt to obtain the cooperation of other publishers in putting the proposals
of the Commission into practice. The hope was expressed that the Commission
might be able to bring about cooperation under a signed agreement.
Replies were received from nine papers, each with a circulation of more
than 100,000 but less than 200,000. Six of these announced that they were
already acting in accordance with the proposals of the Commission. A Pitts-
burgh paper said " in Pittsburgh the publishers have already considered and
taken steps to lessem the consumption of paper in the Sunday editions," and rec-
ommended that the Commission "bring the various publishers in their re-
spective cities into consultation." This plan was also advocated by a Minne-
apolis managing editor as follows:
To me the most practical means to this end seems to lie in personal
efforts of the members of the Federal Trade Commission in bringing
about agreements in any one locality to an approximately uniform cut
in the Sunday issues. I believe that if you were to meet personally the
managers of newspapers in each of the large cities you could effect a
decided cut ir. almost all cases.
A St. Louis paper in this group reported that in July, August and Septem-
ber it had reduced its consumption an average of four tons a day below that
of June, 1916. Another of this group wrote as follows :
We are in receipt of your communication in which you recommend that
large Sunday newspapers cut down the size of their publication by elimi-
nating several pages of uninteresting features.
You were right in surmising that such a move would meet with the>
public approval for the reason that we have made a success of a Sunday
newspaper that carries no feature supplements whatsoever outside of
the usual comic supplement for the little folks.
The Sunday Journal averages from twenty-eight to thirty-two pages and
sells for two cents. In five years' time we have built up a circulation which
is practically double that of one of our five cent competitors whose publica-
tion is one of the old style Sunday newspapers and fully five times that of
one of the other old line Sunday newspapers.
The publisher of a New York paper which had made " sharp " reductions
thinks that it " is bound to hurt Sunday papers very much " but that " the
demands of the situation are imperative." He expressed his desire " to co-
operate further " in " common action by all the Sunday newspapers " or by
all of " this particular community." A Baltimore paper said : " We do not
know how it will be possible for us to carry our revision any iurther." A
Detroit paper in this group which had made considerable reductions in its
Sunday editions asked:
Why, at the same time, should not the publishers of the big afternoon
newspapers * * * be asked to bear their just share of this retrench-
ment by reducing the number of editions daily to a necessary minimum.
* * * It is a problem * * * which * * * will require a con-
certed effort and the unanimous cooperation of all the newspapers of the
country.
It is not improbable that its consumption in June was abnormally heavy on account
of the political conventions in that month.
EXHIBITS. 145
Of papers having a circulation of over 50,000 but under 75,000, seven made
replies. Six of these reported that they had already put the recommenda-
tions into practice. One publisher argued for the large newspaper where
quantity is not obtained at the expense of quality, " in order," as he writes,
" to do my proper part in counteracting any impression you may have that
ordinary newspapers, as commonly operated at present, can be improved by
drastic cuts in their size." He quoted the experience of his own paper, how-
ever, to show " that mere bulk is not essential to success in daily journalism."
The publisher of a Seattle paper in this group wrote:
I recently made a canvass of the papers of Portland, Oregon, of San
Francisco, and of Los Angeles, California, and could not find a case where
any newspaper in either of those three cities had made the slightest effort
toward economy in the use of white paper.
A Pittsburgh editor wrote " if other cities were making the same efforts
in the way of economies that Pittsburgers are, it would, I believe, do much
to solve the paper situation." A Minnesota publishing company wrote as
follows :
We have been making drastic cuts in the use of white paper since last
July. We are prepared to go to any extent in this direction that safety
and common sense and cooperation on the part of our competitors in St.
Paul and Minneapolis will permit,
A Mississippi Valley publishing company has been so successful in asking
higher prices for its newspapers than are customary that its contribution is
given below alinpst in full:
The American publishers have violated all of the fundamental rules
of business. The whole business is characterized by waste and lack of
system. There is more waste and more incompetence in the management
of American newspapers than in any other thing in the United States
except in one of the large telegraph companies. There is a provincialism
among publishers that is distressing. Newspaper publishers are crazy
about circulation. In their greed for circulation they put on expenses
without regard to where the money is coming from. They hold the price
of their paper down and resort to all sorts of schemes to increase adver-
tising. In years past they have used their increased circulation as a club
for higher rates. Now the rates have got to a point where the advertiser
cannot afford to pay more. The added circulation gives him no more value,
and the publisher now is at the end of his rope. The big fellows are calling
out to the little ones to save their white paper.
This paper has never sold its white paper at less than cost. We have
always made a profit out of our circulation. The immediate solution of this
difficulty, and a permanent one, will be to raise the price of newspapers in
this country from one to two cents. We get 15 cents a week for our paper.
It is retailed to the newsboys, to news companies, to hotels, etc. for 2$
cents. Ours is, then, what we call a five cent paper. And yet charging
this money we have the largest circulation of any morning or evening
newspaper in the S';uth. We have the circulation because with our mar-
gin of profit on white paper, and with our profit from advertising, we are
enabled to buy news of quality and quantity that makes the paper worth
the money. Those one-cent papers in New York are wholesaled at from
50 to 60 cents r hundred. This amount does not pay for the weight of the
white paper. The New York and Chicago publishers have been suggesting
everything except the one thing necessary. Let them begin to economize
themselves before sending out exhortations to smaller publishers to econo-
mize. If they were to raise the price of the New York papers to two cents,
the waste circulation would immediately be saved; the total number of
papers printed would be reduced, but about the same publicity would be
secured and the value to the advertiser would be about the same.
Whenever the publishers sell their white paper for what it costs or a little
more than it costs, this paper shortage will end.
88569 17 10
146
REPORT ON NEWS-PRINT PAPER INDUSTRY.
For 20 years publishers have thrown the burden of the cost of publica-
tion upon advertising, and having to crowd in so much advertising, and
having to do so many things to get it they, by the very bulk and weight
of the business, have weakened their force as an advertising medium.
The one cent newspapers take a lot of cheap advertising, and I might
say fraudulent copy, which otherwise they would not do if the circulation
income bore a proper proportion of the total expenses. This paper has a
larger circulation than any morning or evening newspaper in the south.
Our paper is sold to the reader for 15 cents a week ; transient reader pays
5# a copy. We get from our agents from 8 to 10^ a week. We get about
12 cents a week net from our mail subscribers. We sell the paper to
news boys in the city for 2J cents a copy. If our paper was selling for 104
a week to the reader and one cent a copy to transients, we would not have
more circulation. Everybody in our territory who reads at all takes the
paper. The small profit that we make out of the white paper, enables us
to print a big paper and to buy an enormous amount of news. The news
keeps up the circulation. The subscriber does not quarrel at the price,
he gets value received.
Last month our white paper bill was $18,000. Our circulation receipts
were around $26,000. If the publishers will make up their minds to sell
their paper at a profit, or at cost, matters will quickly be adjusted.
The Washington Star, whose letter was sent out to members by the American
Newspaper Publishers Association, wrote as follows:
We are in receipt of your letter of October 14th addressed to the Editor
of The Star in regard to the news-print paper situation. You ask for our
cooperation, which we are glad to give, in regard to reducing the consump-
tion of paper.
You may be interested in the comparative figures for the month of Sep-
tember 1915 and 1916:
September.
1915
1916
Amount of paper actually used
tons
416_
2,836
1,950
1,027
2,977
1,887,923
31, 907
220,524
3,719
406
3,078
1,629
756
2,385
- 1,950,467
5,139
227,637
966
Total volume of advertising
columns
Volume of reading matter (daily) . .
do
Volume of reading matter (Sunday)
do....
Volume of reading matter (total)
do
Total circulation (daily)
Returns and adjustments (daily)
copies.,
do
Total circulation (Sunday)
do .
Returns and adjustments (Sunday)
do
In the Sunday issue we have greatly reduced the amount of reading mat-
ter, eliminating entirely many features and reducing the space occupied by
many others. Besides this, in both the daily and Sunday issues, we have,
by reducing the news heads and careful editing of news stories, reduced the
amount of space now being used for reading matter nearly 20%.
From the circulation we have cut off all returns, and eliminated waste in
every way possible. We have constantly been studying every practical
means of reducing the consumption and economizing space, but up to this
time have not limited the advertising nor cut the reading matter to a point
where we feel that we have injured the value of the paper to the reader.
If the news print situation is actually as it has been stated and the con-
sumption continues to exceed the production, there is one of two things
left for the publisher to do to reduce the consumption. One is to increase
the price at which the paper is sold to the public or the alternative, to in-
crease the rate which is charged the advertiser to a point where the adver-
tising volume will be reduced.
EXHIBITS. 147
Nineteen papers having circulations of over 25,000 and under 50,000 answered
the commission's letter. Sixteen of these had reduced or were trying to reduce
their consumption of news-print paper. One of this group, after reciting its very
effective economies, says :
I am of the opinion that the reason more publishers have not put into
effect a system to eliminate all waste and to economize on news print is
because very few have felt the scarcity, or been affected by the advance in
price.
Another says, however, that though fully protected by contract till December
31, 1917, it has cut down its consumption heavily and would be willing to cut
the Sunday paper still further if competitors would do likewise, but " I
know * * * at least one of our competitors will not agree to this."
Another says that the proper way to get at this is an absolute agreement by
all the newspapers. Another urges selling price commensurate with paper cost
and prohibition of mailing Sunday papers on Friday night. One publisher
writes as follows:
The fact that a number of the larger newspapers own or control the
paper mills that supply them, and will not cooperate, makes it very diffi-
cult for other newspapers to economize as they would like to.
Of 30 papers having circulation of over 10,000 and under 25,000, there were
24 that had reduced, or were about to reduce their size. One publisher thought
that the remedy lay in refusal of second-class mail privileges under certain
conditions. Attention was called by another to the fact that many publishers
" are getting their news-print supply under contracts that allow them to do as
they choose." One said: "Large Sunday circulations are confined wholly to
the metropolitan papers, and it is to them that we must look for large savings
of stock." The same point is made by six others. Of these one wrote as
follows : x
The publisher, who has been more than forty years in the newspaper
business, believes that a very great part of the shortage in new r s print at
the present time is due to extravagance in use, especially by the huge metro-
politan Sunday newspapers, who have piled feature upon feature until the
bulk of their issues have gone beyond all reason and beyond the actual
demand of the reading public ; in fact, he has been long convinced that the
people would welcome smaller newspapers generally. The only suggestion
that I can offer regarding practical ways of making your proposal effective,
is to bear strongly in your urgings upon the large newspapers in the great
cities. Unless they show disposition toward some unselfish action, there
can be no question that the smaller newspapers of the country will be com-
pelled to carry the burden of this abnormal situation.
The publisher of a Baltimore paper expressed his view on the same subject
as follows:
Take Baltimore English language papers as an example. There are two
morning papers, three afternoon papers. These 5 daily papers put out
every day from 14 to 30 pages each. There are three Sunday papers,
putting out from 32 to 70 or more pages each. If these publications would
cut down but two pages daily per paper the saving, based on given circu-
lation would amount to the sum of over 32 tons per week enough to run
a dozen small papers.
Another publisher who made the same point prefaced it with an interesting
account of his own economies as follows :
We have furthermore reduced our magazine section, first from 12 pages
to 10 and now to 8 pages. The interesting part about this reduction on
our part is that we have been able to effect it without materially injuring
the standard or quality of our paper and without sacrificing any of our
essentially valuable features. We have accomplished it by closer and more
discriminating editorship, with the definite purpose in view of making one
148 KEPOBT ON NEWS-PRINT PAPER INDUSTRY.
word count for two and moderating the typographical display of all matter.
We are very much pleased with the results of our efforts thus far and
feel confident that they can be carried still further.
However, we want to say to you frankly that unless the publishers of
the larger newspapers can be made to see the wisdom of this policy and
put it into effect, the general result is not going to be sufficient to relieve
the situation. The big publishers, with keen and enterprising competition
to meet, hesitate to take the initiative, and any movement in the desired
direction is left to the smaller newspapers in more or less noncompetitive
cities. The decrease in tonnage, therefore, is relatively small when com-
pared to the total, because as you know five or six of the larger cities will
use a greater tonnage than practically all of the smaller cities combined.
A Michigan paper stated that the publishers of that State had already met
to work out plans to economize paper.
Only 19 papers having circulations of over 5,000 and under 10,000 responded
to the Commission's letter. Of these 16 were already trying to reduce their
consumption. One business manager in this group made the point that if the
metropolitan papers would cut down their size, the smaller papers would at
once follow their example. He also suggested the suspension of all papers for
one day.
Of the 21 papers having circulations under 5,000 which replied, 13 were
using less paper than formerly. Several of these papers urged the great im-
portance of economies by the metropolitan dailies.
EXHIBIT 3.
TARIFF DUTIES ON PRINTING PAPER.
Act of March S, 1883, Schedule M:
Printing paper, unsized, used for books and newspapers exclusively, 15
per cent ad valorem ; sized or glued, 20 per cent ad valorem.
Act of October 1, 1890 (McKinley Law), Schedule M, paragraphs 417 to 418:
Printing paper unsized, suitable only for books and newspapers, 15 per
cent ad valorem. Printing paper sized or glued, suitable only for books
and newspapers, 20 per cent ad valorem.
Act of August 27, 1894 (Wilson-Gorman Law), Schedule M, paragraph 306:
Printing paper, unsized, sized or glued, suitable only for books and news-
papers, 15 per cent ad valorem.
Act of July 24, 1897 (Dingley Law), Schedule M, paragraph 396:
Printing paper, unsized, sized or glued, suitable for books and news-
papers, valued at not above 2 cents per pound, three-tenths of one cent per
pound ; valued above 2 cents and not above 2i cents per pound, four-tenths
of one cent per pound ; valued above 2i cents per pound and not above 3
cents per pound, five-tenths of one cent per pound; valued above 3 cents
and not above 4 cents per pound, six-tenths of one cent per pound ; valued
above 4 cents and not above 5 cents per pound, eight-tenths of one cent per
pound; valued above 5 cents per pound, 15 per centum ad valorem:
Provided, That if any country or dependency shall impose an export duty
upon pulp wood exported to the United States, there shall be imposed
upon printing paper when imported from such country or dependency,
an additional duty of one-tenth of one cent per pound for each dollar of
export duty per cord so imposed, and proportionately for fractions of a
dollar of such export duty.
Act of August 5, 1909 ( Payne- Aldrich Law), Schedule M, paragraph 409:
Printing paper * * *, unsized, sized, or glued, suitable for the print-
ing of books and newspapers, but not for covers or bindings, not specially
provided for in this section, valued at not above two and one-fourth cents
EXHIBITS. 149
per pound, three-sixteenths of one cent per pound; valued above two and
one-fourth cents and not above two and one-half cents per pound, three-
tenths of one cent per pound ; valued above two and one-half cents per
pound and not above four cents per pound, five-tenths of one cent per
pound ; valued above four cents and not above five cents per pound, eight-
tenths of one cent per pound; valued above five cents per pound, fifteen
per centum ad valorem : Provided, however, That if any country, depend-
ency, province, or other subdivision of government shall forbid or restrict
in any way the exportation of (whether by law, order, regulation, con-
tractural relation, or otherwise, directly or indirectly) or impose any
export duty, export license fee, or other export charge of any kind what-
soever * * * upon printing paper, wood pulp, or wood for use in the
manufacture of wood pulp, there shall be imposed upon printing paper
when imported either directly or indirectly from such country, dependency,
province, or other subdivision of government, an additional duty of one-
tenth of one cent per pound when valued at three cents per pound, or less,
and in addition thereto the amount of such export duty or other export
charge imposed by such country, dependency, province, or other subdi-
vision of government, upon printing paper, wood pulp, or wood for use
in the manufacture of wood pulp.
Act of July 26, 1911 (Canadian Reciprocity Act), Section 2:
Pulp of wood mechanically ground; pulp of wood, chemical bleached,
or unbleached ; news print paper, and other paper, and paper board, manu-
factured from mechanical wood pulp, or from chemical wood pulp, or of
which such pulp is the component material of chief value, colored in the
pulp, or not colored, and valued at not more than 4 cents per pound, not
including printed or decorated wall paper, being the products of Canada,
when imported therefrom directly into the United States, shall be admitted
free of duty, on the condition precedent that no export duty, export license
fee, or other export charge of any kind whatsoever (whether in the form of
additional charge or license fee or otherwise), or any prohibition or restric-
tion in any way of the exportation (whether by law, order, regulation,
contractual relation, or otherwise, directly or indirectly), shall have been
imposed upon such paper, board, or wood pulp, or the wood used in the
manufacture of such paper, board, or wood pulp, or the wood pulp used
In the manufacture of such paper or board.
Act of October 3, 1913 (Underwood Law), Schedule M, paragraph 322:
Printing paper (other than paper commercially known as handmade or
machine handmade paper, japan paper, and imitation japan paper by what-
ever name known), unsized, sized, or glued, suitable for the printing of
books and newspapers, but not for covers or bindings, not specially provided
for in this section, valued above 2$ cents per pound, 12 per centum ad
valorem : Provided, however, That if any country, dependency, province, or
other subdivision of government shall impose any export duty, export
license fee, or other charge of any kind whatsoever (whether in the form
of additional charge or license fee or otherwise) Upon printing paper, wood
pulp, or wood for use in the manufacture of wood pulp, there shall be
imposed upon printing paper, valued above 2 cents per pound, when im-
ported either directly or indirectly from such country, dependency, province,
or other subdivision of government, an additional duty equal to the amount
of the highest export duty or other export charge imposed by such country,
dependency, province, or other subdivision of government, upon either print-
ing paper, or upon an amount of wood pulp, or wood for use in the manu-
facture of wood pulp necessary to manufacture such printing paper.
Free List, paragraph 567:
Printing paper (other than paper commercially known as handmade or
machine handmade paper, japan paper, and imitation japan paper by
whatever name known), unsized, sized, or glued, suitable for the printing
of books and newspapers, but not for covers or bindings, not specially
provided for in this section, valued at not above 2 cents per pound,
decalcomania paper not printed.
Act of September 8, 1916, section 600, paragraph 322:
Printing paper (other than paper commercially known as hand made or
machine hand made paper, japan paper, and imitation japan paper by
150 EEPOET ON NEWS-PRINT PAPER INDUSTRY.
whatever name known), unsized, sized, or glued, suitable for the printing
of books and newspapers, but not for covers or bindings, not specially pro-
vided for in this section, valued above 5 cents per pound, twelve per centum
ad valorem : Provided, however, That if any country, dependency, province,
or other subdivision of government shall impose any export duty, export
license fee, or other charge of any kind whatsoever (whether in the form
of additional charge or license fee or otherwise) upon printing paper, wood
pulp, or wood for use in the manufacture of wood pulp, there shall be
imposed upon printing paper, valued above 5 cents per pound, when im-
ported directly or indirectly from such country, dependency, province, or
other subdivision of government, an additional duty equal to the amount
of the highest export duty or other export charge imposed by such country,
dependency, province, or other subdivision of government, upon either
printing paper or upon an amount of wood pulp, or wood for use in the
manufacture of wood pulp necessary to manufacture such printing paper.
Free List, paragraph 567:
Printing paper (other than paper commercially known as hand made or
machine hand made paper, japan paper, and imitation japan paper by
whatever name known), unsized, sized, or glued, suitable for the printing
of books and newspapers, but not for covers or bindings, not specially
provided for in this section, valued at not above 5 cents per pound,
decalcomania paper not printed.
EXHIBIT 4.
TABIFF DUTIES ON WOOD PULP.
Act of 1883, Schedule M:
A duty of 10 per cent ad valorem was provided upon pulp, dried, for paper
makers' use.
Act of 1890, Schedule M, paragraph 415:
Mechanically ground wood pulp, $2.50 per ton, dry weight ; chemical wood
pulp unbleached, $6.00 per ton, dry weight; bleached, $7.00 per ton, dry
weight.
Act of 1894, Schedule M, paragraph SOS:
Mechanically ground wood pulp and chemical wood pulp unbleached or
bleached, dutiable at the rate of 10 per cent ad valorem.
Act of 1897 (Dingley Law), Schedule M, paragraph 393:
Mechanically ground wood pulp, one-twelfth of one cent per pound, dry
weight; chemical wood pulp, unbleached, one-sixth of one cent per pound,
dry weight ; bleached, one-fourth of one cent per pound, dry weight : Pro-
vided, That if any country or dependency shall impose an export duty on
pulp wood exported to the United States, the amount of such duty shall be
added, as an additional duty, to the duties herein imposed upon wood pulp,
when imported from such country or dependency.
Act of 1909 (Payne Law) ; Schedule M, paragraph 406:
Mechanically ground wood pulp, one-twelfth of one cent per pound, dry
weight: Provided, hoivever, That mechanically ground wood pulp shall be
admitted free of duty from any country, dependency, province, or other
subdivision of government (being the product thereof) which does not
forbid or restrict In any way the exportation of (whether by law, order,
regulation, contractual relation, or otherwise, directly or indirectly) or
impose any export duty, export license fee, or other export charge of any
kind whatsoever, either directly or indirectly (whether in the form of addi-
tional charge or license fee or otherwise) upon printing paper, mechanically
ground wood pulp, or wood for use in the manufacture of wood pulp : Pro-
vided further, That if any country, dependency, province, or other subdivision
of government, shall impose an export duty or other export charge of any
kind whatsoever, either directly or indirectly * * * upon printing paper,
mechanically ground wood pulp, or wood for use in the manufacture of
wood pulp, the amount of such export duty or other export charge shall
be added as an additinal duty to the duty herein imposed upon mechan-
EXHIBITS. 15 1
ically ground wood pulp when imported directly or indirectly from such
country, dependency, province, or other subdivision of Government. Chem-
ical wood pulp, unbleached, one-sixth of one cent per pound, dry weight ;
bleached, one-fourth of one cent per pound, dry weight: Provided, That
if any country, dependency, province, or other subdivision of government
shall impose an export duty, or other export charge of any kind whatso-
ever, either directly or indirectly * * * upon printing paper, chemical
wood pulp, or wood for use in the manufacture of wood pulp, the amount
of such export duty, or other export charge, shall be added as an addi-
tional duty to the duties herein imposed upon chemical wood pulp when im-
ported directly or indirectly from such country, dependency, province, or
other subdivision of government.
For provisions of the Canadian reciprocity act of 1911 as to wood pulp, see
Exhibit 3.
Act of October 2, 1913 (Underwood Laid) ; free list, paragraph 6^9:
Mechanically ground wood pulp, chemical wood pulp, unbleached or
bleached, and rag pulp.
EXHIBIT 5.
CONTRACT FORMS FOR THE SALE OF NEWS PRINT.
SPECIFICATIONS OF QUANTITY.
There have heretofore been three common forms of quantity specifications,
which were substantially as follows:
Maximum and minimum provision. That the vendor agrees to sell and de-
liver, and the vendee agrees to purchase and receive from the vendor, all the
news-print paper required in printing and publishing all the editions of the
, a newspaper published in the city of - , not exceeding tons, nor
less than tons.
Leeway provision. The vendor agrees to sell and furnish to the vendee, and
the vendee hereby agrees to purchase and take from the vendor, for use in the
publication of the , a newspaper published in the city of - , tons
of news print per year, with a leeway of 5 per cent over or under in quantity.
Entire supply provision. The vendor agrees to sell and furnish to the ven-
dee, and the vendee hereby agrees to purchase and take from the vendor, for
use in the publication of the - , a newspaper published in the city of
, their entire supply, estimated at tons, during the period from
to .
The inadequacy of provisions like those above has been repeatedly demon-
strated ; under them both the manufacturer and publisher are left in un-
certainty.
If publisher desires the maximum quantity or an amount substantially in
excess of the approximately estimated tonnage, the manufacturer may have
difficulty in meeting his obligations.
If the publisher desires the minimum tonnage, the manufacturer must offer
any excess he has provided to meet the contingency, at a reduced price and
thus demoralize the open market.
If many publishers simultaneously require the maximum tonnage, the quan-
tity available for purchase in open market is reduced, and publishers not pro-
tected by contracts bear the consequences.
The new standard contract seeks to avoid these difficulties by having the
tonnage specifically stated, which the manufacturer shall be obliged to deliver,
and the publisher to accept and pay for, to be ordered and delivered in definite
and equal periodic installments.
152 REPORT ON NEWS-PRINT PAPER INDUSTRY.
SPECIFICATIONS OF WEIGHT.
Qross weight basis. Payment according to actual weight of roll as delivered
in press room with allowance for weight of core.
Production basis. Not payment according to pound or ton as above, but
upon basis of so many pounds making a thousand 8-page sheets, e. g., 114
pounds per thousand 8-page sheets.
The gross weight basis has been the one in general use, with a standard
basis of weight of 32 pounds per 500 sheets measuring 24 x 36. It is ex-
pressly provided in the standard contract that the weight is to be determined
without reference to the production basis, and that the paper is to be run as
near to the weight as practicable, but 5 per cent, i. e., 1.6 pounds on 32, over
or under the nominal weight shall be considered good delivery.
SPECIFICATION OF WIDTH.
There are over forty variations in the width of rolls, though usually they
run from 74 inches full width to 62 or 63 inches, and then in fractions of an
inch. The Standard contract proposes, as a uniform width, 66 inches, 49$
inches, 33 inches, subject to change only with the consent of the manufacturer.
PRICE.
Generally quoted on 100-pound basis.
Terms of payment. Diversity has existed in the terms of payment : net cash
in specified days from date of invoice ; not later than specified date of succeed-
ing month ; 30 days from arrival of cars at destination, etc., are common. The
standard form proposes net cash 30 days, or not later than the 15th of the
month following shipment.
Freight. Further standardization is made by fixing the price upon a mill
basis, that is, f. o. b. at mill. The' publisher thus stands the freight charges
or is given an allowance therefor in the price. Under this arrangement, it
follows that the purchaser makes his claims for damaged paper against the
carrier, unless the paper was defective when it left the mill.
STOBAQE.
The standard contract does not contain a " storage clause." The result is
that the purchaser must provide his own storage.
8TANDABD CONTBACT.
A new standard form of contract to cover deliveries in 1917 has been adopted
by most of the news-print manufacturers. There are a few minor variations
in the forms used by some of the manufacturers, but the principal provisions
are substantially the same. A copy of the standard contract as proposed by
the News Print Manufacturers Association is as follows :
STANDARD FORM OF CONTRACT.
IN CONSIDERATION of the mutual covenants and agreements hereinafter
set out, THE STANDARD PAPER COMPANY, of the City of New York, State of
New York, hereinafter called the SELLER, agrees to sell and hereby does
sell, and THE NEWS PUBLISHING COMPANY of the City of New York, State
of New York, hereinafter called the PURCHASER, agrees to buy and pay for,
and hereby does buy, six hundred (600) tons of roll news print paper
required to print editions of " The Morning News," a newspaper published
EXHIBITS. 153
In the City of New York, New York, during the period beginning January
1, 1916, and ending December 31, 1916, both dates inclusive, to be ordered
and delivered in equal monthly installments of fifty (50) tons, not cumu-
lative, subject to the following terms and conditions :
1. This contract, together with the TBADE CUSTOMS attached hereto and
made a part hereof, is complete in itself, and sets forth the agreement and
conditions between the parties hereto, and it may not be assigned by
either party except by consent of the other.
2. Specification, A. The said paper shall be of substantially the same
average quality as sample attached to this agreement and of approxi-
mately the following basis of weight : 24 x 36, 32/500, without reference to
production basis.
B. Widths of rolls 66 inches, 49* inches, 33 inches.
3. Price. $2.68 per one hundred pounds actual weight of rolls, including
paper and wrappers, but excluding cores, ON GARS AT MILL. Price in-
cludes freight allowance of 18 cents per one hundred pounds. Routing Is
reserved to the SELLEE.*
4. Terms. Net cash thirty (30) days from date of invoice, or not later
than the 15th day of the month for all paper shipped the previous month.
Payments shall be made in Exchange.
5. Delivery. The paper to be furnished under this agreement shall be the
product of with mills located at .
6. Contingencies. In case the SELLEE shall be unable and fail at any time
to make and supply, or the PUBCHASEB shall be unab\e and fail to take and
use said paper in consequence of strikes, fire, explosion, lock-outs, combina-
tions of workmen, flood, drought, embargoes, war, the acts of God, the public
enemy or any cause beyond the control of either party hereto, the SELLEE
shall not be liable to the PUECHASEB for failure to supply such paper, nor
shall the PUECHASEB be liable to the BELLES for failure to take such paper
during the period of the disability.
7. Cancellation. If the PUECHASEB shall fail to pay any amounts when
due under this contract, or fail to make settlements as provided herein, the
SELLEB may, after ten (10) days written notice, cancel this contract and
declare the obligations of the PUECHASEB for all paper furnished hereunder
due forthwith, notwithstanding the terms hereof, but the PUBCHASEB shall
remain liable to the SELLEB for all loss and damage sustained by reason of
such failure.
1 The new contract forms of one company contain the following provisions In regard
to prices :
8. * * * (b) The above price of net per one hundred pounds F. O. B.
Mill to be adjusted annually proportionately up and down as the average aggregate
cost to the mill of coal, wood and labor for each one hundred pounds of paper
manufactured by the said mill varies each year, during the life of the contract,
from the average aggregate cost to the mill of coal, wood and labor for each one
hundred pounds manufactured by the mill for the first ten months of the calendar
year 1916, the schedule of these costs for 1916 being attached hereto and both parties
hereto certifying to the correctness thereof. The basis price of net mill being
made on the basis of costs for the first ten months of the calendar year 1916, this
will be the cost schedule on which adjustments will be made each year. This clause
of variation will also apply to any groundwood or sulphite pulp that the mill may
have to buy outside, as compared to the mill's cost schedule through the mill's
inability to manufacture in its own plant. Adjustment to be made by payment in
cash by either side to the other on February 15, 1918, for the preceding year of
1917, and a like adjustment to be made on each succeeding February 15th for the
preceding year following during the life of this contract.
6. * * * (b) In consideration of the fact that the price for paper above fixed
IB very greatly less than the price the Seller can obtain therefor If it limited the
life of its contracts to a short period, and that the Seller is willing to and has
sold said paper for said low price on condition that the Purchaser shall continue
to purchase paper at the above price for the full term of this contract, the Pur-
chaser agrees in case of Its failure to take and pay for any of the paper purchased
hereunder, or in case the Purchaser cancels this contract, to pay the liquidated
damages hereinafter set forth for its breach or cancellation. Said liquidated dam-
ages shall be a sum equal to the difference between the price of the paper theretofore
delivered hereunder computed on the basis of the present price which the seller is
receiving for the same quality of paper from customers (which price is stipulated
to be per one hundred pounds F. O. B. Mill) and the price of the paper
theretofore delivered hereunder computed on the basis of the contract price herein-
before fixed. In the event of the breach or cancellation of this contract by the
Purchaser, the obligation of the Purchaser shall be limited to pay the contract
price hereinbefore fixed for paper theretofore delivered and the liquidated damages,
hereinbefore set forth, the same to be the Seller's damages by reason of the Pur-
chaser's refusal to continue to take the paper through the term and life of this
contract.
154 REPORT ON NEWS-PRINT PAPER INDUSTRY.
THIS AGREEMENT is executed in duplicate original and shall be governed
by the laws of the place of the legal domicile of the SELLER.
Executed at 100 Broadway, City, County and State of New York, this 10th
day of December, 1915.
STANDARD PAPER COMPANY, SELLER,
By JOHN JOHNSON, President.
THE NEWS PUBLISHING COMPANY, PURCHASER,
By JOHN JONES, President.
ROLL NEWS PRINT PAPER TRADE CUSTOMS.
1. Tonnage. PURCHASER shall order a definite tonnage of paper to be
taken over the contract period and in equal monthly installments of the
total contract tonnage.
2. Basis of weight. Five per cent. (5%) over or under the contract
basis of weight shall be considered good delivery.
3. Widths. The widths of rolls mentioned in a contract are permanent
unless the SELLER agrees to change.
4. Specifications for shipments. The PURCHASER shall furnish to the
SELLER by the 15th day of each month complete specifications for the ship-
ments to be made the succeeding month.
5. Weight. The weight of roll news print paper shall be gross weight
less only the weight of cores.
6. Delivery point. Delivery point is on board cars at place of manu-
facture.
7. Terms. Terms net cash thirty days from date of invoice or not later
than the 15th day of the month for all paper shipped the previous month.
8. Cores. Cores shall be charged to the PURCHASER at one cent per inch
if paper and three cents per inch if iron, and shall be returned promptly,
freight prepaid, when they shall be credited to the PURCHASER at invoice
price.
9. Claims. A. No allowance shall be made for waste, damage or paper
left on cores.
B. In case of claim of any nature applying upon any shipment of paper
made under a contract, the SELLER shall be notified immediately, but no
claim shall be allowed for consequential damage.
EXHIBIT 6.
CIRCULARS SENT OUT BY JOBBERS IN REGARD TO THE HIGH
PRICES AND SCARCITY OF PAPER.
One of the questions in the schedule sent out by the Commission to news-
paper publishers was as follows :
State reasons given you by seller for any recent increase in price of
news print. Give full particulars, copies of correspondence, etc.
In response, many of the publishers sent in circular letters that they had
received from jobbers. A number of these letters are given below.
[No. l.]
SMITH, DTXON COMPANY,
DIVISION OF THE WHITAKER PAPER Co.,
Baltimore, January 17, 1916.
GENTLEMEN : While all prices are " subject to change without notice,"
this phrase is taking on a very definite meaning in these days, owing to
conditions which the paper manufacturers of this country are facing.
Certain chemicals used in making paper, have been bought in enormous
quantities by the manufacturers of high explosives; importations of other
raw materials have stopped. The cost of these chemicals have advanced
to a point never before reached, and in the case of some of them, there is no
available supply at any price.
EXHIBITS. 155
The paper mills are unable to contract at a fixed price for these prod-
ucts, and are forced to purchase as their needs demand at ever increasing
prices. This accounts for the unstable paper market.
Unless otherwise instructed, we will charge all of your orders at our
lowest current price, even if higher than you have paid on previous ship-
ments. If we are forced to write you regarding every order received,
waiting for your authority to charge at a higher price, the chances are that
the price will be still higher by the time your answer reaches us.
Rest assured that no advantage will be taken of the conditions we are
facing, and that no prices will be raised except where absolutely necessary.
Yours, very truly,
SMITH, DIXON COMPANY Div.
[No. 2.]
WHY YOUR PAPERS COST YOU MORE.
Many buyers of paper are wondering if conditions justify the rapid
advances that have been made, and will be made as long as the market
remains in the present unsettled state.
The answer to these questions are the facts: that the paper manufac-
turers are compelled to advance prices, because of the high costs of raw
materials, particularly of chemicals and dyes.
The table below shows the normal scale of prices, as compared to the
prices that paper manufacturers are now paying for these same materials :
Bleached Sulphite was $2.65 cwt. Now $3.75 to $4.25 cwt
Bleaching Powder
" 1^ c.
13c. (and unobtainable)
Soda Ash
" 65 c. cwt.
2c. "
Rosin
" 3.75 bbl.
6.50 bbl.
Satin White
" 5c. Ib.
9c. Ib.
Casein
" 6ic. Ib.
20 to 30 c. Ib.
Alum
" Ic "
3c.
Aniline Colors
" 40c. "
$20. '
Fourdrinier Wires
" 29c. sq. ft.
39c. sq. ft.
Woolen and Cotton Felts
have advanced 10%
Thirds and Blues
was $1.35
2* c.
Lumber (cases and frames)
" $13.25 M.
$18.50 M
Furthermore, the chemical people will not make any contracts at any
price, so that mills are simply buying from hand to mouth, as their needs
require, in many instances being unable to obtain certain supplies at any
price.
As soon as conditions are normal, that is, when imports can be again
resumed, or a larger domestic supply developed, prices will right them-
selves.
The chemicals used by paper manufacturers in making bleaching powder,
have been bought in great quantities during the past few months by the
makers of high explosives, so that this market has been very demoralized.
This accounts for the shortage of supply, and 'the very high prices of such
chemicals.
The higher prices now prevailing do not mean exorbitant profits to either
the manufacturer or the paper dealer. It is a difficult thing to maintain
even usual profits above the constantly rising costs.
SMITH, DIXON COMPANY Div.,
Baltimore, Md.
FEBRUARY, 1916.
[No. 3.]
WEST-CTTLLTJM PAPER COMPANY,
WHOLESALE PAPER FOR PRINTERS,
Dallas, Tex., February 24, 1916.
To THE TRADE:
You have, no doubt, been keeping in pretty close touch with the condi-
tion of the paper industry, but thinking that many of our customers do not
fully appreciate the seriousness of the situation, we have printed copies of
a few letters such as we are receiving daily, as we believe the information
156 REPORT ON NEWS-PRINT PAPER INDUSTRY.
will be worth something to the trade. You can readily see that it is im-
possible for any dealer to issue a price list which would be good even for a
day, and that it will be necessary for us to bill orders at prices prevailing
from day to day. We have access to the largest stocks of paper in the
United States and it is not necessary for us to wait on mill orders to re-
plenish our stock, which in many instances, would require three to four
months' time. We believe we are in the best possible position to take care
of the Texas trade, especially on small orders which are for immediate use,
and feel that if you will entrust us with your orders, you will get quick
service and the benefit of the best price to be had.
Very respectfully,
WEST-CULLTJM PAPER COMPANY.
PLEASE NOTE : We think it will be worth your time to read carefully the
enclosed copies, and to give same as much publicity as possible, in order to
prepare your customers for the advance in prices, which you will be com-
pelled to make.
SAINT Louis, February 16, 1916.
WEST-CULLUM PAPEB Co., Dallas, Texas.
GENTLEMEN : In order to keep you posted on the paper situation, and in
order that you may be thoroughly alive to the seriousness of the present
market conditions we give you this letter. Conditions are growing worse
daily. Many mills are facing the necessity of shutting down on account
of lack of materials and the cost of every product which is used in the
manufacture of paper has increased in price from 25% to 2000%.
In order that our customers may know the reasons for the existing con-
ditions, and so they will appreciate the gravity of the situation, we give
them the facts and figures. Here are the causes for the advancing prices:
FIEST. Increased cost of all materials used in making paper.
Rags 100% increase
Bleached Sulphite formerly $45 ton, now $110
Soda Pulp 80% to 50% increase
Alum 300% to 400% increase
Rosin 40% increase
Wire Screen 25% to 50% increase
Felts 50% increase
Bleaching Powder 1000% increase and none to be had
Colors 500% to 2500% increase and up
Satin White 25% to 50% increase
Blanc Fix 100% to 150% increase
Casein 250% increase
Soda Ash 300% increase
Rags have advanced in price, both on account of short supply and the
demand. Munition makers are using tremendous quantities of cotton rags
to make explosives. Formerly we imported vast quantities of rags from
Europe. This is all shut off. Russia uses linen almost as universally as
we do cotton and a large proportion of our supply comes from there.
None has been coming in for months and stocks are exhausted.
Chlorine (bleach) has advanced from lie. a Ib. to about 15c. a Ib. on
account of the stopping of supply from Europe and the domestic makers
are busy with chlorine gas and chloroform.
SECOND. Decreased supply. You know the situation on colors.
Other paper ingredients are similarly affected by demand and supply.
Before the war, Germany supplied a large part of the paper for the world,
except to the United States, and even this country bought considerable paper
and lots of pulp. Sweden also sold us large amounts cf pulp, newspaper
and wrapping both countries making paper and pulp from Russian Wood.
Germany, of course, was shut out at once, but general business was so
paralyzed all over the world that existing stocks of paper lasted for
months and the loss of the German supply was not felt, while Sweden
could continue to supply her share. After about one year, however,
Swedish mills began to run out of wood, as on account of the conditions,
they could not secure the usual amount from Russia so that cut off the
Swedish supply.
EXHIBITS. 157
Then European mills, formerly dependent on Germany and Sweden for
pulp, turned to Canada, taking all the surplus Canadian pulp which for-
merly came to the United States. This caused a further shortage. To
this trouble was added the high prices and scarcity of all chemicals and
dyes, of which Germany formerly supplied us with the greater part. All
these conditions making it increasingly difficult for the paper makers to
secure supplies.
THIBD. Increased demand.
Just at the time that paper became scarce, there came a tremendous
increase in business both here and in England and South America, creat-
ing an enormous and unheard of demand for paper. Stocks everywhere
were short and there came a tremendous demand. Right on top of the
shortage, South America, Asia, Australia and even some of the European
countries began to buy paper in America, and to offer big premiums over
existing prices.
The combined demand is for several times as much paper as American
mills can make and the available supply of raw stock is very short and
high in price, so it is no wonder prices are jumping.
There is no precedent for this present situation. We don't know where
prices will go, but would not be surprised to see prices advance as much
as 100%.
If your customers think the advances in paper are not reasonable, call
their attention to the much greater increase in the price of all metals,
electrical goods, all chemicals, woolen goods, and many others which have
advanced very much more than paper.
Be exceedingly careful and warn all your salesmen not to take any
orders for paper unless you are sure they can be shipped.
FEBRUARY 16, 1916.
WEST-CULLUM PAPER Co.,
Dallas, Texas.
GENTLEMEN : To show my appreciation of the business you have given
me in the past, I feel it is my duty to advise you of the seriousness of the
situation with reference to paper, and give you such information as I
can as to what you may expect in regard to price, and some of the reasons
for the unprecedented advances which are already in effect and still
greater advances which we may expect in the near future.
The paper trade is now facing an absolute famine and many mills will
be forced to shut down on account of being unable to obtain rags, pulp,
and chemicals. The largest mills in the country are refusing to make
prices except at such prices as they may name upon receipt of the order
at their mills, same being subject to their ability to make the paper at all.
They will take no contracts nor orders for future delivery. The situation
is desperate.
We have one letter from a big mill, stating they view the situation with
the greatest alarm and believe we are going to see the most vicious
market ever known. The largest aggregation of mills in the United States
writes us as follows:
" Now in regard to entering future orders at the present prices, we
cannot guarantee them at all, and prices are subject to acceptance at the
prevailing prices on the day that the orders are received here. We know
this is a terrible state of affairs and leaves you in a very unsatisfactory
position, but you are not nearly as bad off as we are, because even where
we have contracts for stock and material we cannot get them, and when-
ever we ask for any material, prices are quoted us subject to prior sale
and advance without notice, and in many instances where we have received
quotations and wired acceptance of them we have been notified the stock
had all been sold, so you can see we cannot guarantee our prices, even from
one day to another."
Now, the fact is, there is a tremendous demand for paper, a shortage
of materials with high prices and a wild scramble to secure such materials
as are yet to be obtained. Many dealers will be out of paper unless some-
thing unforeseen occurs and every indication is that prices will continue
to advance rapidly and that paper will get scarcer until an actual famine
exists and that many buyers will be unable to secure their necessary
supply.
158 REPORT ON NEWS-PRINT PAPER INDUSTRY.
We will put forth every effort to secure enough paper to keep our old
customers supplied. We don't want to sell any one buying large amounts,
but expect to split up our stock among our regular customers to keep them
supplied as far as possible. Therefore, we are not making any lower
prices for large quantities than we could for case lots. Our object is to
take care of our regular trade and not try to take advantage of the
situation to get new customers, because the mills are now in a panic
because they cannot get material to fill orders and are lying down on their
contracts. We think we are in better position to take care of our cus-
tomers than the majority of our competitors on account of the large stocks
we always carry and believe we will be in a better position to fill orders
than many of our competitors for the reason that we have tied up with
mills that are best fixed to run during this famine. By our policy we
hope to have a lot of loyal friends among our customers for the reason that
we have taken care of them when -no one else could. We are not solicit-
ing large orders for future use.
We believe you are going to see some fire works in the paper market soon.
Our positive instructions are not to tie up on any big business and none
of our salesmen have authority to bind our house on any agreement as all
orders are taken subject to acceptance by the house. So it will be neces-
sary for us to consult the St. Louis Office before accepting any large orders,
and we cannot take any future orders without authority from St. Louis
not even carloads. Any of our customers who will place their orders
with us and allow us to place them at the best prices obtainable, will, I
think, in the long run, fare better and be better taken care of than the
ones not fortunate enough to be on our books as our good friends.
In another letter I give you some of the causes of these advances as your
salesmen may not be fully posted and you can give this letter to them
so they can answer inquiries from their customers. We wish this letter
to be notice to you that, while we will be glad to take care of your orders
and believe we will be able to take care of them fairly well, that all former
prices are absolutely withdrawn, and we can only quote you from day to
day. A better plan would be for you to place your orders with us and we
will ngree to handle them for you on a reasonable profit and place them at
the lowest possible market price the day we receive the order.
[No. 4.]
THE CLEMENTS PAPER COMPANY,
WHOLESALE PAPER,
Nashville, Tenn.
To OUB CUSTOMERS :
On account of the extraordinary conditions now existing in the paper
industry, all orders are accepted subject to prices prevailing at time of
shipment, to change without notice and to our ability to secure stock.
Mills are filled with orders and are refusing to take any new business,
and it is not as much a question of price as it is to get stock within a
reasonable time, and we are not certain just what the cost will be on many
items.
There is a shortage of wood pulp, rags and chemicals used in paper
making, and paper mill workers have been given shorter hours and higher
wages. Unfortunately this country has been dependent on foreign countries
for a large part of their raw material, and prices have advanced to the
highest level ever known.
Prices in general have advanced approximately 30% on most of the
staple items used by printers, and we will issue a circular as soon as
practicable giving more in detail the changes that are taking place.
Under existing conditions we are trying to give the best service and as
accurate information in regard to the market as can be obtained. Your
customers will be fortunate for the next few months in getting the kind
of paper they desire, even at the advanced prices you will be forced to
charge them.
Yours, truly,
CLEMENTS PAPER COMPANY.
MAECH 24, 1916.
EXHIBITS. 159
. [No. 5.]
TEMPORARY NET PRICE LIST, ISSUED APRIL 15, 1916.
NOTE. Use our Fall 1915 List for Sizes, Weights and Descriptions, but
THIS LIST for Guidance on Prices.
It is generally known how seriously the cost end of the paper manu-
facturing business has been directly and indirectly affected by affairs in
Europe.
Materials used in paper making, such as dye stuffs, bleaching powder
and sulphite pulp, soda ash, rags, casein and the numerous other ingre-
dients have had many sharp price advances. In addition to this, the
demand is far in excess of normal. Hence it is obvious that under pre-
vailing conditions there can be no stability in the selling prices of paper.
This Temporary Price List represents the latest word in prices at the
time of going to press, but we are obliged to notify you that due to uncer-
tainty, all prices are subject to change without notice. You are assured,
however, that we will always give you the very best quotations on all
orders entrusted to us.
PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
J. W. BUTLER PAPER COMPANY,
(Established 1844.) Chicago.
[No. 6.]
OKLAHOMA CITY, OKLA,. June 24, 1916.
GENERAL LETTER NO. 59.
GENTLEMEN: The News Print Situation is getting worse instead of
better and several of the mills are going out of the Print business
Kimberly-Clark Co., Rhinelander and Dells Pulp & Paper Co., three of the
largest print mills are discontinuing the print business and nearly all the
other mills are snowed under.
Therefore, owing to the stiff advance put on paper and scarcity at the
present time, we have found it necessary to advance our prices as follows,
effective June 26, 1916:
Ton lots 5 00
1,000 Ibs. 5 10
500 " 5 25
Bdl lots 5 40
Ream lots 5 85
Brkn " 6 85
These prices are all f. o. b. Okla. City.
If we can not get this price for print paper we want to pass up the
business. Our supply is getting very limited and we have promised only
one car for July, and may possibly get a car in August, which is the only
stock we have in sight. We want to take care of our regular customers
as far as possible, so do not take on any new print business, if you can
avoid it.
In a letter I received from I. W. Carpenter he stated he had just
bought two cars on the 14th, for which he was obliged to pay $3.95.
Yours, very truly,
KANSAS CITY PAPER HOUSE,
L. F. LEACH, Jr.
[No. 7.1
OMAHA, NEB., June 27, 1916.
GENTLEMEN: I returned home Thursday morning from about a week's
trip thruout the paper making district of Minnesota and Wisconsin. I
thought you might be interested in a general way in some things which I
learned on this trip.
160 REPORT ON NEWS-PRINT PAPER INDUSTRY.
There was a slight rumor about a possibility of an advance on flat
writing papers and bond papers, but I have advised some manufacturers
I have seen strongly against it and I hope it will not come at this time.
I find the market on book paper especially stiff. The price went up
half a cent per pound at three different mills on Wednesday of last week
and I find the book paper mills crowded with business, most of them
having sixty days' business on their books and not desiring orders at the
present prices.
/ I find the news print situation quite serious on account of three large
[mills making an aggregate of one hundred tons per day are arranging to
discontinue making news print and get on more profitable lines. This
taken together with the increased consumption of news print by the
Metropolitan dailies causes a shortage in the supply to provide for the
demand. Hence, the present tremendous prices the mills are asking and
getting for paper.
In our experience in business in Omaha of nearly thirty years we have
never encountered anything like the present conditions. In our judgment
it would be well for all users of news print to cut down as much as pos-
sible their consumption for a few months or until the war is over. A
good suggestion from the manufacturer was that the publisher pass this
advance on to the advertiser in slightly increased rates on advertising.
It is absolutely necessary that all printers pass on the increased cost of
paper on job work. Is it not worth while to increase also your prices on
advertising enough to cover the increased cost of news print?
Another thing which has contributed to the high price of paper is the
foreign demand. I am told that during the first four months of 1915 we
exported 5,000,000 pounds of printing paper and during the same period in
1916 we exported 35,000,000 pounds of printing paper, and we had offered to
us more than ten times as much as was accepted by the American mills.
The European war has brought about the above change in international
commerce.
In our judgment then nothing short of peace in Europe will restore
prices on all grades of printing paper to anything like normal conditions.
Hoping your customers will receive the necessary advances graciously,
and with kind regards, we are,
Yours truly,
CAEPENTEB PAPEB Co.
[No. 8.]
To THE TRADE:
JULY 21, 1916.
Mill prices have again been withdrawn and as a consequence we are com-
pelled to cancel all outstanding quotations and prices listed in our General
Catalog No. 10 and our Supplementary Price List No. 27. Until a new
schedule of prices can be arranged we will quote only on application.
Your indulgence during these unsettled times is requested.
Yours, truly,
ZELLEBBACH PAPEB COMPANY,
Los Angeles : San Diego.
JULY 21, 1916.
Owing to the continued advances in the price of papers of all grades and
the increasing scarcity of raw materials, we find it necessary to withdraw
all prices.
A new price list is now being printed, and until this reaches you we will
be glad to quote on request.
BLAKE, MOFFITT & TOWNE,
Los Angeles.
Effective Saturday, July 22, 1916.
The continued disturbed condition among paper manufacturers becomes
more aggravated daily, thereby creating a shortage in practically all kifids
of paper to an extent that compels the mills to make further substantial
advances, and, under these circumstances, we are obliged to withdraw all
EXHIBITS. 161
outstanding quotations and prices, and until a new list can be issued we
assure you that on all orders intrusted to us the lowest market prices will
be charged.
SIERRA PAPER COMPANY,
126-130 S. Los Angeles St., Los Angeles, Cal.
[No. 9.]
BUY NOW.
The print paper market shows no improvement and stocks are depleted
generally. We will have another car tomorrow and can accept your order
for immediate shipment, subject to prior sale, on the following sizes and
weights at 54c. Des Moines, for standard grade :
24 X 35-32 35X48-64
301 X 44-50 35X44-58
The situation is more critical today than ever and it is good business to
buy now while you can get it at any price.
WESTERN NEWSPAPER UNION,
.JULY 28, 1916. Des Hoines, Iowa.
[No. 10.]
D. L. WARD COMPANY,
MANUFACTURERS AND DISTRIBUTERS,
OFFICES, 28 SOUTH SIXTH STREET,
WAREHOUSES, 238-240 QUEEN STREET,
Philadelphia, Pa.
GENTLEMEN : Paper conditions. In answer to such questions as " What
are the causes for the present high prices of paper? " " When do you think
prices will decline? " which I am being constantly asked as a distributer of
paper, and as often asking myself, as a buyer of the same commodity, I
submit a few facts that stand out as the important causes for the present
situation.
First. A large proportion of bleached and unbleached sulphite and
ground-wood pulp that we use in the manufacture of paper, has come from
Europe. The amount from Central Empires has been entirely stopped,
while the pulp from Norway and Sweden has materially decreased. What
we are receiving is costing double its former value, due to the present cost
of coal, labor, ocean freight rate, and steamship insurance.
Rags. Fifty per cent of our supply of rags comes from Europe.
Chemicals. Dyes, chemicals, felts, paper machinery and in fact every
other article which goes into the manufacture of paper, has increased any-
where from twice to ten times the price paid one year ago.
Labor. Labor has increased twenty-five to fifty per cent, due to the fact
that practically all mills have replaced the two-tour system with the three,
requiring three sets of workmen instead of two. In many localities the
present scale of wages that munition factories have set, has had to be com-
peted with.
Demand. The demand for paper has increased thirty per cent. In my
opinion, one half of this increase is actual consumption, which will con-
tinue as long as we have the present prosperity. The other is speculative
buying by all types of paper consumers. This, due to the present high
prices, will naturally discontinue. This will result to the advantage of both
seller and buyer.
High prices. The above answers the first question, to the best of my
ability, as to what causes the present high prices of paper.
Second. As to when prices will decline, if you believe the above infor-
mation, I am sure you will agree, only after the "end of the present European
war. It will then take some time for prices to adjust themselves because
Europe's pulp supply is greatly dependent on the supply of logs from Russia,
and no trees have been cut in the last year. It will therefore be six months
to a year before there will be any steady relief in sight. It is quite unlikely
, 88569 17 11
162 REPORT ON NEWS-PRINT PAPER INDUSTRY.
that the paper mills will ever be able to go back to the two-tour or
twelve-hour day in regard to labor. It is for this reason that I doubt that
we shall ever see the former abnormally low prices.
Experience. An experience as a very large buyer and seller of practically
all types of paper, and an intimate associate with nearly all large manu-
facturers, leads me to answer both questions quoted as above for the guid-
ance of my customers and others interested in the purchase of paper.
Yours very truly,
D. L. WARD COMPANY,
GEORGE W. WARD, President.
AUGUST TENTH, 1916.
P. S. By way of comparison, I submit the following table of importation
of sulphite:
Importation of sulplilte for year.
Tons.
1912 354,000
1913 378. 400
1914 458,156
1915 394,321
Contrast this table with the imports to date this year :
Imports of sulphite by months for 1916, from Europe.
Tons.
January .__ 28, 830
February 31, 972
March 15,091
April 9,270
May 3,982
O
THIS BOOK IS DUE ON THE LAST DATE
STAMPED BELOW
I
AN INITIAL FINE OF 25 CENTS
WILL BE ASSESSED FOR FAILURE TO RETURN
THIS BOOK ON THE DATE DUE. THE PENALTY
WILL INCREASE TO 5O CENTS ON THE FOURTH
DAY AND TO $1.OO ON THE SEVENTH DAY
OVERDUE, *. yf
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